Spanish Government Announces Sweeping Tax Cuts
Spain News
Published: 24 June 2014 11:58 CET
Updated: 20 December 2019 12:58 CET
Do you feel you've been paying too much in income tax in Spain?
Well, If like most of us you work and pay any form of income taxes here in Spain, you will be pleased to learn that the Spanish government have recently unveiled some sweeping new tax cuts which will most likely put a few more Euro's in your pocket.
The new tax reforms were announced on Friday by finance minister Cristóbal Montoro who stated that "The time has come for lower taxes for everybody". He also went on to say that the current tax brackets would be reduced from seven to five.
Some of the changes include a drop in the low income tax rates from the current 24.75% to 20% in 2015 and then a further drop to 19% in 2016.
The higher tax rate of 52% for those earning more than €300,000 per year will drop to 45% in 2016. Corporate tax rates will also be reduced from 30% to 25%.
Overall, income tax rates will fall by around 12.5% over the next two years and will eventually see income tax rates fall below the pre-2012 levels.
The new reforms come from the same conservative Popular Party (PP) and Mariano Rajoy who when they came to power back in 2011 implemented over 50 income tax hikes during their first two years in office.
At the time, they said that the income tax rises would help to reduce the budget deficit. This is a little strange considering that they are now saying that by slashing income taxes, they will achieve the same thing!
The government believes that the economy which officially emerged from the recession last summer is growing sufficiently and that tax revenues will still increase even though income tax revenues will be slashed.
The economy is forecast to grow by 1.2% this year.
Some would say that this is no real surprise what with the general elections taking place in November 2014 and the PP party looking to win over the electorate and remain in power.
Hopefully these measures will also play a role in reducing unemployment in Spain which currently stands at around 26%.
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