A FISCAL reform aimed at 'restarting consumer spending' and 'rewarding' the ordinary citizen for his or her 'sacrifices' in the last three years will in fact only save the average taxpayer around 170 euros a year.
Critics include the Troika – who want Spain to increase IVA – and opposition members of the government who say the only residents who will benefit from lower taxes will be the ultra-high net worth earners whilst the rest are unlikely to see a difference.
They also say the PP government has done little to clamp down on multi-million tax evasion or to boost employment or commercial or personal cash flow.
The highest earners will see their upper-quartile taxes fall from 52 to 45 per cent, whilst income in the second quartile - upwards of 12,000 euros - will see a tax reduction of just 0.75 per cent.
Seven tax bands have been cut to five, and the one applying to gross annual income between 20,200 and 33,007 euros will go up by one per cent, to 30 per cent, potentially ruling out any benefits for middle-income earners or even increasing what they have to pay.
Low-income self-employed workers will fare best, since tax retentions at source when they bill commercial clients will go down from 21 per cent to the 15 per cent they were across the board until September 2012 – a move that will take effect from this Tuesday, July 1.
For all other self-employed workers earning more than 12,000 euros in gross income – or more than 1,000 euros a month before tax – they will have to wait until January 1, 2015 when their retentions will fall from 21 per cent to 19 per cent.
These retentions are practised on all earnings from commercial clients without respecting the minimum threshold or 'personal allowance', set to rise from 11,000 euros to 12,000 euros, but will be adjusted during the income tax return period between May and July of the following year.
Read more at thinkSPAIN.com