The coalition Executive creates a “solidarity tax” that will be in force in 2023 and 2024 for large assets and announces a temporary increase in Companies for large companies
The Government has agreed on a package of fiscal measures that contemplates a reduction in personal income tax for low and medium incomes, those that are below 21,000 euros gross per year. Specifically, it will extend the reduction for work income from 18,000 to 21,000 euros.
The Minister of Finance, María Jesús Montero, has distinguished this measure from “the deflationations” that “Madrid or Andalusia” have carried out, since these are universal. In addition, the Executive has announced that it will raise the personal income tax rates that tax savings income and has agreed on a “solidarity tax” that will be in force in 2023 and 2024 for large assets of more than three million euros.
Montero expects that this will raise a maximum of 1.5 billion euros from 23,000 large taxpayers. A temporary increase in corporate tax for large companies and tax reductions for the self-employed and SMEs will also be approved. Between the increases and decreases, the package will together provide a net additional collection of 3,144 million euros in the next two years.
“We are not going to touch either the sections or the rates of personal income tax, but rather to expand the benefits that these incomes already have,” Montero stressed this Thursday, who in recent days has been very critical of the reductions announced by the regional presidents. in personal income tax and assets.
During the presentation of the measures, the minister explained that the reduction for work income will increase. Now, this decreasing benefit is being reduced until it reaches 18,000 euros, and the Government will increase it so that it reaches 21,000 euros.
As a result of this improvement, the minimum from which taxes begin will start at 15,000 euros, instead of the current 14,000 euros. In this way, any eventual increase in the minimum wage will not be affected. The changes will mean savings of 1,881 million for these taxpayers.
Between four and five million workers could benefit from this tax reduction. The ministry gives several examples of how the measure would affect. A married worker with two children, a joint personal income tax return and a salary of 19,000 euros, would stop paying 331 euros. A pensioner with a benefit of 16,500 euros would save 689 euros. And a worker without a partner and with two children, who earns 18,500 euros, would have a benefit of 516 euros.
“It is not a figure chosen at random: the median salary is around 21,000 euros,” added the head of the Treasury. And he has insisted that his measures are “surgical”: “All international organizations say it: massive tax cuts must be avoided.” The Government has stressed that, in addition, for groups that do not pay personal income tax and therefore cannot benefit from this measure, there will be other aid on the expenditure side, such as the increase in the minimum income, the minimum non-contributory benefits and the minimum wage.
The Budgets will also include the reduction of VAT from 10% to 4% on feminine intimate hygiene products such as tampons and pads, a measure included in the coalition agreement that had been left out of the abortion law. This super-reduced rate will also be extended to non-medicinal condoms and contraceptives.
There will also be tax relief for the self-employed, with an estimated annual impact of 184 million. Specifically, the reduction for expenses that are difficult to justify that is applied in the direct estimate will be raised from 5% to 7%. And there will be an additional reduction from the 5% in net module performance. The Treasury estimates that there are 956,000 self-employed people who will benefit from the first aid, and 577,000 from the second, for a total of 184 million.
Tax increases
The new tax on the rich will have a parallel processing to the Budgets, as it is a new figure that requires its own law. This tax, baptized as the Solidarity Tax on Large Fortunes, will be in force temporarily, during 2023 and 2024. The minimum from which it will be required is three million euros. From this figure and up to five million, the rate will be 1.7%. Between five and ten million, of 2.1%. And for bases greater than 10 million, 3.5%. The Treasury estimates that it will affect 23,000 taxpayers.
To avoid double taxation, the amount paid for the wealth tax – currently in force and managed by the communities – may be deducted in the new tax, which has the same tax base and similar rates. That is, in practice it will be charged primarily in those territories that are subsidizing the regional tax, such as Madrid and, starting next year, Andalusia. It should be remembered that the first 700,000 euros of assets are exempt from this tax, plus 300,000 euros for the habitual residence, debts are subtracted and there are assets that are left out of the calculation, such as the family business. So the fortunes that are taxed will have a real estate well above three million. This new figure has been designed for only two years with the intention that the taxation of wealth will be thoroughly reformed later.
Otherwise, personal income tax would remain almost the only instrument to ensure the progressivity of the system, Treasury sources have pointed out.
The Government had maintained until this week that at this time of crisis and need for resources to sustain public services it was irresponsible to talk about tax cuts; In fact, he announced a new tax on large fortunes (to compensate for the elimination of the Wealth tax in some PP communities) and announced that he would approve more “selective increases” in other taxes. In the last few hours, however, and after several autonomous communities - starting with the Valencian Community, governed by the PSOE - proposed reductions in personal income tax to compensate for the rise in prices, the Executive floated the possibility of also undertaking its own reductions in taxes. taxes, selectively and focused on middle and low incomes.
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