November 27, 2020

The Government raises the corporate, wealth and personal income tax on high incomes




The President of the Government, Pedro Sánchez, and Vice President Pablo Iglesias have presented the bill of the General State Budgets for 2021. Some accounts that will be approved later in the Council of Ministers and in which, apart from what is met in the program sent to Brussels, little by little more details of them are known. Thus, as Iglesias explained in the presentation, the Budgets bring with them tax increases for the large companies, wealth and high incomes. “The objective is that those who have more pay more,” he detailed.

Sánchez and Iglesias shared the roles and while the first emphasized green investments and innovation, the second emphasized the social measures and tax increases defended by his party. In this way, Podemos has managed to make the PSOE yield and, As reported by ABC, it has strained an increase in personal income tax to capital income over 200,000 euros of three points, up to a rate of 26% – compared to the current 23 -.

For work income above 300,000 euros, the increase will be two points, moving the state marginal rate from 45% to 47%. This last increase affected incomes above 140,000 euros in the previous 2019 Budgets that Congress overthrew, and increased to four points (to 49%) for those of more than 300,000 euros. Finally PSOE and Podemos have reached a sort of intermediate solution. This increase has more political value than tax collection, since the previous increase agreed to those who earn more than 130,000 euros entered 328 million in one year, an amount that will be less when faced with a less ambitious increase.

As it also has a political value and not so much tax, the rise in the Wealth Tax of one point to those who earn more than ten million euros. the Fiscal Authority, would have entered between 8 million and zero euros compared to the 339 million estimated by the Executive. As a Heritage it depends on the communities, These are the ones that must approve the rise and not the State, which deflates the collection forecasts.

However, one of the great achievements of the purple training has been to include an increase in Corporation Tax “for large business groups.” Iglesias has announced that they will limit the “exemptions for dividends and capital gains generated by their participation in subsidiaries.” The 2019 accounts already included the reduction of the exemption for foreign dividends from 100% to 95%, returning to the regime that existed before the 2015 tax reform. This measure does have collection weight, al Airef it encrypted it at 1,528 million in 2019, and can be a blow to the balance sheets of large internationalized companies, so it will be necessary to see the detail of the measure.

Increase in pensions and Iprem

Another important measure, although already advanced these weeks, is the increase in pensions. These will rise 0.9%, according to the CPI, while the non-contributory minimums will double, 1.8%. But the most outstanding thing is the rise in the Iprem, the reference indicator for calculating aid and benefits, will have a rise of 5% after being frozen for three years.

Other items announced were 6,000 million for the ecological transition, an increase of 70.2% in education, 102% in infrastructure, an additional 1,300 million for trade and tourism, the two sectors most affected by the pandemic, and 790 million for the farming.

For the presentation of the budget accounts, Sánchez has also had to agree to two measures that have been the red lines for the leader of Podemos. The first is the greater coverage to access the minimum vital income. As Iglesias explained, the years of dependent life are reduced from three to two and there may be more than two holders in the same address. The second measure is the limitation of rental prices, which will be implemented within a maximum period of four months. “It will allow lower prices where the market is stressed,” he explained.

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