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Montoro Confirms Future Spanish Tax Cuts For Lower Incomes

by Ulrika Lomas, Tax-News.com, Brussels

27 December 2013


In a recent interview with the Expansión newspaper, the Spanish Finance Minister Cristobal Montoro has disclosed that the Government intends to cut individual income taxation (IRPF) for those on lower incomes over the next three years, while higher-income taxpayers will continue to pay more.

Montoro also indicated that, while the IRPF reduction will be a key policy within future Spanish tax reform, the Government's main aim will also be to reduce the country's fiscal deficit. To do that, he said, it would be necessary to correct the shortcomings of the tax system, particularly in the insufficient amount of taxes collected.

However, while expanding the tax base and raising the tax take from companies, he confirmed that the Government would also look to provide further tax incentives for those businesses investing in productive capacity. Montoro has already stated that future fiscal reform should go as far as possible in encouraging economic growth, which would itself help to generate additional tax revenues.

It has been argued that economic conditions in Spain are now significantly different, even from a few months ago. With economic growth, even if only 1 percent, now forecast for 2014, it is felt that the time will be right for an announcement of tax reforms in mid-2014, which would enter into force in 2015.

While it is being said that tax burdens must be lowered after the large increases since 2012, the Government has also pledged that value-added tax is to remain fundamentally unchanged next year and in 2015.

TAGS: individuals | Finance | tax | business | value added tax (VAT) | tax incentives | corporation tax | ministry of finance | Spain | tax reform | individual income tax

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