Spain’s Socialist-led coalition government has said that residents whose wealth exceeds 3 million euros ($2.9m) will be subject to a new asset tax in 2023 and 2024.

Finance Minister María Jesús Montero on Thursday described the temporary wealth tax, which she said will affect 23,000 people, or 0.1 percent of taxpayers, as one of “solidarity”.

She said people with holdings of 3-5 million euros ($2.9m-$4.8m) will be taxed 1.7 percent and those whose personal worth is 5-10 million euros ($4.8m-$9.6m) will be taxed at 2.1 percent. Individuals with fortunes above 10 million euros ($9.6m) will pay 3.5 percent.

The tax is part of a range of adjustments planned for Spain’s upcoming budget that are aimed at alleviating the hardship caused by rampant inflation and soaring energy prices.

The government also plans to increase the income tax rate from 26 percent to 27 percent for people earning more than 200,000 euros ($191,870).

The capital gains tax for incomes above 300,000 euros ($287,805) will go up to 28 percent, an increase of 2 percentage points.

The Socialist party and its junior far-left coalition partner, Unidas Podemos (United We Can), agreed on the measures, which are expected to bring in 3.1 billion euros ($3bn) over the next two years.

The government said the money would be used to finance initiatives to help people with lower incomes.

The government plans to reduce the income tax on annual wages of up to 21,000 euros ($20,146).

Progressive, efficient, fair

Montero said this will benefit about 50 percent of the workforce given that the average annual salary in Spain is 21,000 euros ($20,146).

She said the changes would make Spain’s tax system “more progressive, efficient, fair and also enough to guarantee social justice and economic efficiency”.

The governing parties also agreed to reduce the sales tax on feminine hygiene products from 10 percent to 4 percent.

Spain recently approved windfall taxes on large energy companies and banks and has temporarily slashed the sales tax on natural gas from 21 percent to 5 percent.

The annual inflation rate climbed to 10.5 percent in Spain last month.

Spain’s regional governments also have some leeway on taxation. Two of them run by the conservative Popular Party – the country’s main opposition party – have cut real estate taxes. Regional governments run by the Socialists plan other tax relief measures for low-income earners.