Spanish PM defies Supreme Court in tax row

Spanish prime minister Pedro Sanchez at a press conference at La Moncloa palace to talk on the Supreme Court's decision to revoke a final judgement on mortgages loan expenses, in Madrid, on Nov 7, 2018.
Spanish prime minister Pedro Sanchez at a press conference at La Moncloa palace to talk on the Supreme Court's decision to revoke a final judgement on mortgages loan expenses, in Madrid, on Nov 7, 2018. PHOTO: AFP

MADRID (AFP) - Spain's prime minister defied the Supreme Court in a rare move on Wednesday (Nov 7), stating that banks would now have to pay a mortgage tax instead of customers in opposition to what the highest court had ruled.

"The government respects - as it always has respected - the work and independence of judicial authorities but as the executive power, we can't but regret the situation created by the Supreme Court's sentence," Pedro Sanchez told reporters.

On Tuesday (Nov 6) evening, after weeks of controversy and to a huge outcry, the court ruled that just like they had done for decades in accordance with the law, customers getting mortgages would continue to pay the tax.

That same court had decided the exact opposite just three weeks prior on Oct 18.

But after Spain's banking shares dived, it decided to re-examine the decision, leading to its change of heart.

In rare criticism of the justice system in a country whose government vaunts the separation of powers, Sanchez asked the Supreme Court to engage in "self-critique". He said his government would adopt a decree on Thursday (Nov 8) aimed at modifying the law that regulates property transactions.

"Spaniards won't ever again pay this tax which will be paid by the financial sector, by banks," he said.

His decision to challenge the Supreme Court comes at a time of suspicion in Spain of the independence of judicial authorities, heightened by Catalonia's secession crisis and the severe charges pressed against separatist leaders.

"This is about the reputation of the Supreme Court, its credibility, how it managed the issue," said Antonio Barroso, deputy research director at the Teneo Intelligence analysis group.

"Sanchez saw a window of opportunity and is taking advantage of it." Oriol Bartomeus, politics professor at the Autonomous University of Barcelona, concurred.

"The impact in society of the Supreme Court's measure is helping the prime minister take this decision, which is certainly controversial in terms of balance of powers," he said.

The news comes at a critical time for the Supreme Court, which is set to try Catalan separatist leaders early next year in what promises to be a hugely sensitive case.