10/06/2014 – Cinco Dias
In 2008, when the recession began, nominal GDP went up by 3.3%, while tax collection declined by 13.6%. The next year, the first decreased another 3.8%, whilst the other dipped down by 17%. Other European countries has not seen such drastic collection slumps. Spain´s Government is preparing a fiscal reform that will be indifferent to economical fluctuations.
Therefore, the Treasury wants to focus on taxes which are less exposed to economic cycle, for example on property. This tax will be raised (main houses excluded).
At the moment, the owners of two and more houses which are not rented contribute with 1.1% on each property annually (2% in case when the last register revision was carried out before the 1st January 1994). Nominal marginal rate that is added to the amount may range from 24% up to 52%, depending on the income of the taxpayer.
The Ministry of Finance weights up various solutions for the taxation reform, for instance cutting in Property Transfer Tax but raising unit´s afterward fiscal obligations. Right now the tax oscillates around 6.5% – 10% and some experts suggest it should be set up accordingly to each region in Spain.
It is evident that taxes applied on property possession escaped the recession unscathed in oppostion to those on property purchase. To illustrate, the PT has not failed in Spain since its establishment in 1989.
The Government understands the reform must decrease the fiscal pressure on some income sources (especially salaries) without jeopardizing meeting the stability targets. Administrative debt reached €67.75 billion and the authority pledges pulling the amount down to €30.9 billion by 2016. It believes cut in people´s personal income tax (PIT) will be counterbalanced by an increase in taxes on properties.
Instead of current seven taxation groups going along with the amounts earned monthly ranging from 24.27% up to 52%, there will be only 5 partitions. The minimum treshold will be reduced to 24%. The decrease will be notable for all taxpayers, not so much for the most affluent ones though.
Also, the reform will embrace raise inside the PIT but for basic need expenditures. The minimum rates will be raised especially for families with children and other significant loads. Moreover, those earning less than 12.000 Euros per year will be exempt to the PIT.
Original article: Cinco Días (by Jaume Viñas)
Translation: AURA REE