The Spanish Government announced this Thursday a fiscal package that included reductions in the IRS for low and medium incomes and a new temporary tax on large fortunes, which had already been announced in recent days.
The reductions in personal income tax (IRPF) will reach taxpayers who earn up to 21,000 euros gross per year, the average income in Spain, as reported by the Minister of Finance, María Jesús Montero.
At the same time, there will be an IRS increase on capital gains and other gains from investments, shares or dividends when they exceed 200,000 euros per year.
At the company level, there will be tax reductions for the smallest, those with a turnover of less than one million euros per year, which the Spanish Government hopes to cover around 400,000.
On the other hand, the creation of a new “solidarity tax” on large fortunes is confirmed, exceeding three million euros, for two years, in 2023 and 2024, which the Spanish Executive justifies with the need to finance the response. to the crisis generated by the war in Ukraine and inflation.
The Spanish Government estimates that this temporary wealth tax will generate a collection of 1,500 million euros in the next two years and will apply to some 23,000 taxpayers, 0.1% of the total.
The tax on large fortunes is added to other previously announced extraordinary ones, to tax banks and companies in the energy sector for two years, with the same purpose of financing measures to respond to the current crisis.
The new taxes should be in place for the next two years, but “it all depends on how the war in Ukraine unfolds,” María Jesús Montero said last week.
As for consumption, the package presented provides for a reduction in VAT on feminine hygiene products, from 10% to 4%.
Between the announced tax increases and decreases, the Spanish Government estimates a positive net collection for the State of 3,114 million euros in the next two years, which it considers the result of “a fairer model” of distribution of the economic effort between society, defended this Thursday the minister.
The new fiscal package, he added, is a “joint proposal” by the two political forces that are part of the governing coalition in Spain, the socialist party (PSOE) and the left-wing platform United We Can.
Spain has witnessed a “tax war” in recent days, with regional governments announcing tax rebates and suppressions, to which the national Executive responded with this tax package and the creation of a temporary wealth tax.
This new tax had already been advanced by the socialist government in response to the announcements by the regional governments led by the Popular Party (PP, right, in opposition) to end or reduce by 50% the tax on real estate above the 700 thousand euros (excluding the 300 thousand euros for permanent housing), and which is an income from the autonomous communities.
But the regional governments led, like the central executive, by the socialist party (PSOE) have also announced tax cuts (although not in the real estate tax) on the eve of the presentation of the budgets for 2023, the year of several elections in Spain: regional and municipal in May and national legislative at the end of the year.
The president of the Valencian Community, the socialist Ximo Puig, has announced reductions in the IRS tax, in the part that corresponds to the autonomies, for those who earn up to 60 thousand euros a year, which will cover more than 97% of the taxpayers.
The Junta de Galicia, headed by the PP, in addition to a 50% discount on the Real Estate Tax, also announced a reduction in personal income tax with retroactive effect to January 2022 for medium and low incomes, below 35 thousand euros annual.
The Government of Spain, headed by the socialist Pedro Sánchez, reacted with criticism to the announcements of tax reductions, which until Tuesday were only from PP governments and related to real estate tax, considering that “discounts” were being made and “fiscal gifts”. to the rich that could undermine the provision of public services and social support in a crisis context.
The Spanish Government considered this litigation between regions detrimental and appealed to the responsibility of the autonomous executives, questioning the decision to reduce income at a time of need for resources to respond to the impacts of the war in Ukraine and inflation, and when there is autonomous communities that ask for financing reinforcements.
Despite these criticisms, the central government has also advanced with reductions in some taxes, but has stressed that they only affect medium and low incomes and that they will be compensated with the extraordinary taxation of large fortunes, with a positive balance in terms of collection for the state.
Source: Observadora
