Personal Taxes

A half level reduce in earnings tax in Madrid

Isabel Díaz Ayuso’s stubborn promise of an Income Tax Reduction (IRPF) is “imminent”. The call to be the next president of the community of tomorrow has announced that a half-point cut will be made in all sections of the income statement from 2022.

As a preliminary step to his foreseeable inauguration on Friday after winning the regional elections on May 4th, Díaz Ayuso used his inaugural address to announce his political and economic roadmap, which includes approving this year’s income tax cut of half a point in all sections, an election promise that the leader in Madrid has been dragging out since 2019 and which will apply from 2022. Madrid comes in at 8.5. have the lowest minimum section in all of Spain%.

Ayuso’s plan will cut the income statement for all Madrilenians in the autonomous section of income tax by half a point. More than three million taxpayers would benefit from this reduction, “especially the lowest incomes”. According to party sources, worldwide tax savings of almost 300 million are estimated, which will have a greater effect on low incomes at 5.6%. With high incomes, the calculated savings would be 2.4%, they point out.

He recalled that in the Community of Madrid, the lowest incomes pay the least taxes. And he gave an example: With the new cut, a Madrilenian who earns 20,000 euros a year pays 340 euros less than a Catalan and an average of 150 euros less than workers in the regions governed by the PSOE.

According to party sources, the low tax rate since 2004 has resulted in tax savings of 53,000 million euros or equal to 16,500 euros per taxpayer. In this sense, they emphasize that Madrid is the most tax-competitive region and the region with the lowest autonomous income tax rates in Spain: for the lowest incomes, Madrid has a minimum rate of 9% that will remain at 8, 5% with the decrease that will be made in the coming months.

According to the data of the Autonomous Fiscal Panorama of 2021 of the General Council of Economists-Fiscal Advisors (Reaf) published in March, Madrid is the Spanish region with the lowest income tax rates, but it is also the autonomy in which taxation per inhabitant is included in this tax is higher with an average of 3,280 euros, which corresponds to a percentage of 16.72% of the average disposable income per inhabitant. In Catalonia, for example, taxpayers pay an average of 2,439 euros.

Ayuso insists on tackling “the biggest tax cut in history” this year
The measure is part of the “largest tax cut in history”, which will be introduced in the fall. In a message against the “interference” that the government had tried to impose tax increases in Madrid, Ayuso has denied any interference.

The chairwoman of the PP has repeatedly insisted that she will keep the promise to cut income tax, especially during the government’s offensive to implement tax harmonization in the municipalities this year. Díaz Ayuso pointed out in December that “the community is an alternative plan that balances out. We will not allow what they call tax harmonization, that is, increase taxes on Madrilenians. We will fight every fight to prevent it. “

In his speech, Díaz Ayuso pointed out that his government, which will consist of only nine ministries, will “influence a policy that works” and make Madrid the “national economic engine”. As he defended, the region’s taxation is “the one most similar to that of the rest of Europe”, where there are no inheritance, property or gift taxes.

If the government interferes, the people’s leader has assured that she will go to court before any attempt to change her financial policy, because “a free Madrid without low taxes is not understood. “

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