In 2015, the latest tax reform set the minimum personal income tax at €5,550. Ten years later, the amount is still the same, even though the cumulative consumer price index, calculated by the National Institute of Statistics, is 26.7%, which is what it should have been. … Up to 7031.86 euros. What adds to the feeling that we are under pressure is that since then Pedro Sanchez In power, the cumulative CPI is 22.2%. This means that only 4.5 percentage points of current inflation originated from the previous government. The difference resulting from not updating the personal minimum is a silent transfer from the taxpayer to the state.
This is the first edge of the clamp that has besieged the Spanish houses: loss Real purchasing power. Yes, salaries rose, but they did so at prices below prices for most of the period between 2018 and 2023. The National Institute of Statistics attests that despite nominal increases, a significant portion of household real income has been eroded by the inflationary shock. The return per euro was lower, and each payroll was fairer.
The second edge of the clamp was precisely described by the Bank of Spain in a recent working document on cold progressivism (“fiscal drag”) in Europe. Their analysis shows that in the absence of an update to personal income tax standards, inflation automatically pushes taxpayers towards it Higher effective rateseven when their actual health condition deteriorated. Spain appears in the study as the second European country that collected the largest amount of taxes due to the inflationary effect, and the penultimate country that compensated its citizens for this lesser effect between 2019 and 2023. That is, the nominal increase in income was used more than others to increase collections without doing anything… not even submitting a budget.
Thus, while salaries lost purchasing power, the personal income tax did just the opposite: gained it. Personal minimums, deductibles and brackets remained frozen while inflation did its work. The worker whose salary rose to stay afloat ended up paying more taxes on the nominal portion of that increase, even though his real situation did not improve. The state collected more without paying The cost of raising taxes.
The result is clear: the entry of the Spaniards was isolated. Above, prices have risen more than 22% in seven years. Below tax is not transferred with them. Among the families that They pay more and live worse.
Sound fiscal policy required something very simple: updating personal income tax standards to reflect economic reality. Failure to do so has allowed Pedro Sánchez’s government to obtain an extraordinary return on inflation. A performance that was not counted as a tax increase, but had exactly the same effect for taxpayers. jmuller@abc.es
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