October 29, 2020

The tax authority proposes to reformulate the tax credits of private pension plans, rental housing and VAT reduced by “regressive”


“Complete reformulation” of tax benefits to contributions to private pension plans for “regressive”, eliminate joint taxation in personal income tax for discrimination against women, modify the reduction for rental housing for not facilitating access to rent to vulnerable groups, review the reduced VAT rates for “little redistributive effect” and rethink the sicav for the “high concentration of a small number of shareholders”. The Independent Authority for Fiscal Responsibility (AIReF) has analyzed 13 tax benefits, at a cost of 35,000 million, which represents 60% of the total benefits existing in the second part of its report on ‘Spending review’ that has published this Wednesday. These total benefits represent a cost of 60,000 million euros, equivalent to five points of GDP, of which two thirds correspond to VAT. However, this hole has been reduced in the last decade by 1.2 points of GDP due to the disappearance of reductions and deductions from personal income tax.

The president of AIReF, Cristina Herrero, has insisted on the main conclusion of the study: “Tax benefits have an opportunity cost in terms of collection, so it is essential to guarantee their effectiveness so that they fulfill the objective for which they were created.”

The revenue that the public administration loses goes from 17,787 million for reduced VAT to 2,392 million for joint taxation of personal income tax or the 323 million that are no longer charged for the reduced rates of the sicav and socimis.

Of the 13 tax benefits analyzed, the tax authority only proposes changes or eliminations in five of these reductions, although some meet their objectives, there are efficiency problems or the market to which they are directed has specific problems, such as housing. These are the analyzes and proposals for the affected bonuses:

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