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Spanish Left Slams Rajoy's Income Tax Plans

by Ulrika Lomas,, Brussels

03 March 2014

The opposition Spanish Socialist Workers' Party (PSOE) has said that the Government's plans to cut individual income tax (IRPF) in 2015 are tantamount to fraud and deception.

Reacting to Prime Minister Mariano Rajoy's State of the Nation address, the opposition party's spokesperson on the economy and employment, Inmaculada Rodriguez-Piñero, argued that the measures will not be enough to compensate individuals for the tax rises that have been implemented by the Government since the start of the legislative period, namely increases in IRPF, value-added tax (VAT), and the annual property tax (IBI). The proposals will simply not help those hard hit by the crisis, she added.

According to Rodriguez-Piñero, plans to raise the individual income tax threshold from EUR11,200 (USD15,324) to EUR12,000 will benefit very few taxpayers. Income tax statistics show that around 5.7 million workers in Spain earn less than EUR12,000, of which 97 percent are already exempt from income tax, she stated. Prime Minister Rajoy's promise of tax cuts will benefit fewer than 200,000 taxpayers, she said.

Spain's Plural Left group also criticized Rajoy's tax cut plans. The party called instead for the 4 percent super-reduced rate of VAT to apply to electricity, natural gas, and water bills, as well as to public transport. Furthermore, the party suggested levying a corporate tax rate of 35 percent on taxable income above EUR1m; the creation of a tax on luxury goods; the introduction of a tax on financial transactions; and an increase to the bank deposit tax to 0.2 percent.

Rajoy had proposed lowering employers' contributions to a flat rate of EUR100 (USD137) for permanent employees taken on for at least three years, and an increase to the income tax threshold to EUR12,000 from 2015.

TAGS: individuals | tax | value added tax (VAT) | property tax | corporation tax | tobin tax | tax thresholds | tax rates | Spain | tax breaks | tax reform | individual income tax | European Union (EU) | Europe | Work

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