The draft now includes 5 million additional taxpayers to include the middle class in the government’s tax package
The recently announced reduction in income tax for income to 21,000 euros per year within the tax package to counter the effects of the crisis will now be extended to taxpayers who earn up to 35,200 euros in 2023, i.e. including a large part of the worker class.
This is apparent from the draft Royal Decree project submitted by the Ministry of Finance to a public hearing, in which it is explained that the limit on the reduction of the deduction rises to EUR 35,200 gross per year. This means that the beneficiaries of this tax reduction will be expanded from 4 to 9 million taxpayers.
These employees will therefore earn more in the coming year because their payroll deductions will be lower. The problem will arise in 2024, when at the time of making the income statement (corresponding to 2023) the tax will be regularized and they will have to repay the overcharged amounts in 2023. The tax expert of the REAF of the General Council of Economists, Rubén Gimeno, explains to this newspaper that the beneficiaries of this tax reduction will have to pay more in their profit and loss account 2024 “because this limit only applies to the calculation of the withholding, not the tax, so it must be regularized.”
Until now, those who received up to 21,000 euros and benefited from this improvement also had to regularize this with the Treasury in the annual return, the expert explains, but with the difference that these taxpayers were not obliged to submit the income statement because they were exempt from income up to 22,000 euros.
Of course there will be taxpayers to whom this deduction is not applied, this depends on the personal circumstances of each (number of children and marital status) and the income class in which they are located. “It’s a theoretical reduction in deductions for anyone earning less than $35,200 a year, but in practice it won’t be for everyone,” said Luis del Amo, REAF technical secretary.
The question is why the amount of 35,200 euros has been chosen, which is a difference of more than 14,000 euros with the previously proposed limit. Del Amo explains that the income tax system itself forces the treasury to raise the cap so that incomes over 21,000 euros are not harmed by this measure, so the reduction had to be extended, although they do not understand why they chose to amount representing a “significant” margin.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
