Rajoy To Cut Income Tax In Boost For Low Earners
Spain News
Published: 06 March 2014 11:56 CET
Updated: 20 December 2019 12:56 CET
Spanish Prime Minister Mariano Rajoy has recently announced a cut in personal income tax (IRPF) for low earners. The move which will come into force in 2015, will mean that the income tax threshold will be increased from the current level of €5,151 to around €12,000. This puts the threshold to similar levels to the UK allowances, which is £10,000 for 2014/15.
With the current income tax rate at 23.95% for earnings up to €17,707 , this represents a tax saving of around €1,700 per year for the average worker.
Rajoy believes that the Spanish economy is on the mend and there is some evidence to back this up with unemployment figures decreasing by 1,949 in February. Although the drop is quite small, it is nonetheless a drop, which is the first time this has occurred since the beginning of the financial crisis in 2007. Total unemployment in Spain currently stands at around 4.81 million.
The announcement is very welcome and will undoubtedly put a spring back into the step of all those low income workers who have seen income tax rises under Mariano Rajoy and his People's Party.
The recommended changes will be put to parliament in Spring/Summer 2014, but are expected to be passed.
There will also be a reduction in social security payments by employers. For the first two years of employment, and employer will only have to pay €100 per month as opposed to the current amount which varies and is based on an employee's salary.
