What the Treasury gets from the Personal income tax is the most important tax of all., even more than VAT or Corporate Tax (as it is almost 40% of its revenues). Let's see what was the collection in 2016 and 2017, which will help the State to meet all the budgeted expenditures.
The trend in personal income tax in Spain
Recently, in the last few months if not the last two years, there has been talk of positive data on employment. There are figures for growth in Social Security registrations and a reduction in unemployment, which is always a great thing.
The fact that cannot be overlooked, however, is that the employment generated is often precarious, This leads to lower tax and contribution receipts. Now on to the key figures, let's take a look.
It is true that more personal income tax is being collected year by year, but not at the expected rate:
- 2016: the 75,432 million euros in personal income tax (0.1% above the previous year, but the budget for that year was a 4.3% increase)... did not meet forecasts.
- 2017The increase in revenue was estimated to be 7.7% more than in 2016, but at mid-year the increase was 3.2%, not even half of what was budgeted. (July 2018 revision: closed collection figure was 77.038 billion)
The numbers that really matter
Let's see how personal income tax is distributed according to the salaries of Spanish citizens:
- More from 50% of taxpayers are in the 12.000-60.000 € bracket of annual income. That's almost 11 million people
- By under €12,000, As we said, there are more Spaniards than before the crisis (about 8% more), in total: more than 7 million.
- The bulk of the revenue, however, comes from the upper classes: the 3'5% of the citizens' money allows to collect about 40% of the total revenue. by the IRPF... which is soon to be said.
These are certainly worrying figures, especially with regard to the generation of precarious employment and the concentration of wealth in the hands of a few.
Progressivity of the tax, the key to it all
Personal income tax has been conceived as one of the keys to the Welfare State, as it aims to ensure that those who earn less are taxed less (and at a lower average rate) than those who earn more (who are taxed at a higher rate).
Because of this progressivity, it is true that high incomes look for ways to minimise taxation The government is promoting measures to this end. These have been reduced over the years, which is why citizens have complained a great deal, as have tax advisors, who see the inconsistency of these measures, as they are a brake on the economy, reducing the movement of money.
Examples are:
- the elimination of the mortgage repayment tax credit for several years now (for new hires), or
- the reduction of the maximum contribution in the pension plan (limited from January 2021 to €2,000 per year).
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