Fedea estimates that 80% of lowest-income households benefited most from measures such as tax reductions or benefits
Direct aid, ERTE, ICO guarantees, reduction of the staggered payment of personal income tax and VAT for companies, reduction to 0% of VAT applicable to the supply of medical devices… The network woven by the government to support Spanish families During the first year of the pandemic, it managed to reduce inequality in the distribution of household income by 38%, according to a report published this Monday by Fedea.
The study, in which experts analyze the impact of government intervention on household income, finds that monetary benefits accounted for 70% of the reduction, fiscal management for another 8.5%, and benefits in kind (health and education expenditures) for 21, 5%.
This narrowing of the gap between the richest and lowest income households is mainly due to the fact that the latter were the most beneficiaries of the support launched in 2020. In particular, Fedea estimates that 80% of the lowest income households were most favored by the measures taken, as they receive a net effective subsidy. That is, a positive difference between benefits and taxes.
On the other hand, the 20% of households with the highest gross income turned out to be net contributors, supporting an increasingly higher net effective rate, until reaching 27.6%, supported by households belonging to the 1% with the highest income.
The data also shows that in that first year of the pandemic, market income for households as a whole fell on average by 8.5% compared to 2019. However, Fedea experts indicate that the increase in government benefits has “significantly” offset this decline . given that cash benefits (mainly unemployment benefits) have increased by an average of 13%, while benefits in kind have increased by 8% due to higher health expenditure.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
