Many taxpayers will not file returns after government-approved tax adjustments, according to calculations by EsadeEcPol
The sharp rise in inflation has left a real hole in the pockets of Spanish workers, who are suffering a significant loss of purchasing power with very limited wage increases compared to an inflation rate of 8.4%. Under pressure from the opposition, the government decided to proceed without reducing income tax. That is, update the tax by eliminating the effects of price changes. A decision that, according to calculations by EsadeEcPol, enabled the Treasury to withhold 9,000 million euros.
According to a report published by the institution this Tuesday, “if by 2022 income taxes will have collected about €110,000 million, updating fully to 8.4% inflation means giving up collecting about €9,000 million, which is almost a point is of GDP plus deficit’.
The second problem is that this amount of lower collection by definition presupposes a greater spending capacity for households, which fuels inflation. In other words, they indicate that in order to fully adjust personal income tax to inflation, not only the headings must be touched, but practically all elements of the tax.
It should be remembered that this tax figure is the most important within our tax system. And also one of the most complex, as evidenced by the latest approved reforms and amendments. This year, for example, incomes that do not exceed EUR 15,000 do not need to be declared, compared to the previously set EUR 14,000.
Under the previous scheme, 430 euros would have been withheld (43% of the excess above the old limit of 14,000 euros) and he would not have had to file a return, unless he had a relevant second payer. But watch out. Because if the taxpayer who earns 15,000 euros for whatever reason were to file a return, he would pay 387 euros.
A situation that would arise up to 21,200 euros, an amount to which the maximum withholding does not apply. “Obviously, if the taxpayer has no reporting obligation and the withholding is less than the quota, they will not file a return,” they warn from Esade.
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.
