August 5, 2021

The fiscal rise of Sánchez affects 0.5% of taxpayers and 1% of companies | Economy

The fiscal rise of Sánchez affects 0.5% of taxpayers and 1% of companies | Economy

"Sánchez-Iglesias agree to raise taxes to the working middle class and shoot the expense again." So reaction yesterday in tuiter the leader of Citizens, Albert Rivera, before the fiscal measures agreed between the PSOE and Unidos Podemos to agree on the budgets of 2019. "Albert, the VAT is reduced to feminine and veterinary hygiene products, companies are reduced by 2% to SMEs are raised to a minimum rate of 15% to large corporations and 1% of patrimony to those who have more than 10 million euros ", reproached Pablo Echenique, secretary of organization of Podemos, also in the social network, which opened a debate on whether the middle class was going to be hit or not by the measurements.

On which there are serious doubts is whether the tax increases will raise enough to finance the increase in spending of more than 5,200 million euros raised in the budget pact presented last Thursday. Sanchez's tax hikes, described as 'fiscal hacking' by some liberal and conservative sectors, have remained a minor scratch for the 0.5% of the most affluent taxpayers and 1% of the companies.

The Government of Sanchez sought to obtain around 4,000 million euros for the rise of corporate tax to large companies but in the end limits the rise to 1,800 million. And there are serious doubts that this amount will be reached. The rise in income tax has also been shaved from the original intention.

"This increase (that of income tax for high rents) will only affect 0.5% of Spanish taxpayers, or what is the same, 99.5% of citizens will not pay more for personal income tax and yet, they will see improved the Welfare State ", explained the Minister of Finance, María Jesús Montero, after the council of ministers.

According to tax statistics there are around 100,000 taxpayers of those who claim to earn more than 130,000 euros in Spain from the more than 19.6 million total returns (91,408 taxpayers declare more than 150,000 euros). That is, 0.5%.

Two new tranches in the IRPF

"With this reform we are asking the large rents to contribute a little more," he added. The most political minister of finance in recent decades added an example to illustrate the scope of the measure: "A taxpayer who earns 200,000 euros will pay about 1,100 euros more per year for income tax."

The rise in income tax for high incomes consists of an increase of two points in the scale of tax from 130,000 euros and four points from the income section that exceeds 300,000 euros. This would place in 47%, with a general character the maximum rate for incomes above 130,000 euros and 49% for those that exceed 300,000. If the autonomous communities replicate the rise of the Government these charges could reach 49% and 51% respectively. Even so, the IRPF rates would be lower than those that were in effect between 2012 and 2015, when in the worst of the crisis the Government approved a complementary tax that raised the IRPF to the highest level since the 1980s.

In the original proposal of the PSOE, which was circulating until a few weeks ago, an additional tax of four points was foreseen in the IRPF for incomes above 140,000 euros. But the pact softened the impact of the rise by dividing it into two sections.

Montero detailed on Thursday other of the tax increases included in the agreement with Podemos. The additional income from these fiscal measures was estimated at 5,678 million euros. Although the voices that doubt that this figure of collection can be achieved begin to intensify. And they point to the deficit given the difficulty of financing the increase in spending with the proposed measures.

The middle class is not the affected

The maximum rate applicable to IRPF capital income, which taxes the income from bank deposits, dividends and other financial income, will rise up to 27%. "This measure only affects 0.1% of taxpayers. There is therefore no increase in taxes for the middle and working class, "remarked Montero.

Regarding corporate tax, the minister stressed: "We ask large companies a greater contribution to society." He added: "The Government will not raise taxes on small and medium-sized companies, quite the opposite." In fact, the agreement signed between the two left-wing political parties sets a minimum rate of 15% on the positive corporate tax base. The measure will apply to companies that consolidate in a group or those that invoice more than 20 million euros. The effective average rate for these companies is already at 19%.

In Spain there are 1,485,102 companies that liquidate the corporate tax. Some 15,000 declare more than 20 million euros. That is to say, that the fiscal rise to companies only affects 1% of the companies. "More than 75% of the Spanish productive fabric is made up of SMEs This agreement is great for SMEs because it allows these companies to lower their taxation The measures proposed are for large corporations, those that invoice more than 10 million euros per year, the rest does not affect them or they are reduced ".


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