Orihuela council has kept on hold a long-planned update to its construction tax, known as the ICIO, which has not been revised since 2008. The current rate is set at 500 euros per square metre for new-build properties, despite strong construction activity, particularly along the coast where around 1,000 new homes are built each year.

Council budget forecasts had expected revenue of 6.9 million euros if a new rate of 797 euros per square metre had come into force in 2025. Instead, income remained far lower, with estimates suggesting at least 2.2 million euros has been lost. Previous budgets have repeatedly overestimated ICIO income, with actual receipts often below 40 per cent of forecasts.

The draft ordinance was prepared in August and shared with opposition parties, with the aim of approving it before the end of the year. However, it was never brought to a vote, and coalition partner Vox abstained in the governing board. Developers’ association Provia also warned the increase would deter investment, raise house prices and reduce employment.

The PSOE has criticised the proposal as purely revenue-driven and suggested a gradual increase over five years, along with tax reductions and generous exemptions for social housing, accessibility works and renewable energy projects. For now, the updated ordinance remains shelved.