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Spanish PM vows to eliminate wealth tax if re-elected

MADRID - Spanish Prime Minister Jose Luis Rodriguez Zapatero said Tuesday he would eliminate the wealth tax if reelected in a general election in March, adding that he saw room for further tax cuts.

‘One of the first decisions we would take at the beginning of the next legislature would be the elimination of the wealth tax,’ he told a business conference in Madrid.

‘During this legislature several moderate tax reductions have been carried out. My diagnosis is that there is still room for manoeuvre to lower them, prudently,’ he added.

Spain’s wealth tax is levied on a resident’s total assets—such as property, cars and cash—minus any debts and allowable deductions.

It is collected by Spain’s regional governments and raises a relatively modest amount of about 1.4 billion euros (2.05 billion US dollars) per year.

Zapatero said the central government would compensate regional governments for the lost revenue, adding the wealth tax had already been eliminated by most other European countries.

The leader of the main opposition Popular Party, Mariano Rajoy, promised in July to eliminate the wealth tax.

One of Spain’s largest trade union confederations, CCOO, swifty condemned the promise, saying the tax was a useful tool to force taxpayers to declare what assets they owned even if it did not put much money in state coffers.

Zapatero predicted the public surplus would represent 1.8 percent of gross domestic product in 2007, the same level as last year.