A Reduction Of Half A Point Of Personal Income Tax In Madrid

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The persistent promise of Isabel Díaz Ayuso about a reduction of the Personal Income Tax (IRPF) is “imminent”. The call to be the next president of the Community from tomorrow has announced that a reduction of half a point in all sections will be applied in the income statement from 2022.

As a previous step to his foreseeable investiture on Friday after winning the regional elections on May 4, Díaz Ayuso has used his inauguration speech to announce his political and economic roadmap, which passes, among other issues, to approve this year the Income tax reduction of half a point in all sections, an electoral promise that the leader in Madrid has been dragging on since 2019 and which will be applied from 2022. Once underway, Madrid will have the lowest minimum section in all of Spain, placing it at 8 ,5%.

Ayuso’s plan will lower the income statement by half a point to all Madrilenians in the autonomous section of personal income tax. This reduction will benefit more than three million taxpayers, “especially the lowest incomes.” According to party sources, a global tax saving of close to 300 million is estimated , which will have a greater impact on low incomes, with 5.6%. For high incomes, the calculated savings stands at 2.4%, they point out.

As he recalled, the Community of Madrid is where the lowest incomes pay the least taxes. And he has given an example: with the new reduction, a Madrilenian who earns 20,000 euros a year, will pay 340 euros less than a Catalan and an average of 150 euros less than workers in the regions governed by the PSOE.

Party sources indicate that low taxation has meant a tax saving of 53,000 million euros since 2004, or what is the same, 16,500 euros per taxpayer . In this sense, they emphasize that Madrid is the most fiscally competitive region and the one with the lowest autonomous income tax rates in Spain: for the lowest incomes, a minimum rate of 9% is applied in Madrid, which will remain at 8 , 5% with the decrease that will be undertaken in the coming months.

According to data from the Autonomous Fiscal Panorama of 2021 of the General Council of Economists-Fiscal Advisors (Reaf) published in March, although Madrid is the Spanish region with the lowest rates of personal income tax, it is also the autonomy in which taxation per inhabitant in this tax is higher , with an average of 3,280 euros, which represents 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 addressing “the largest 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 has tried to apply tax increases in Madrid, Ayuso has rejected any interference.

The leader of the PP has insisted on several occasions that she would fulfill the promise to lower personal income tax, especially during the Government’s offensive to implement the fiscal harmonization of the communities this year. Already in December, Díaz Ayuso indicated that “the Community is an alternative plan that compensates. We are not going to allow what they call fiscal harmonization , which is to raise taxes on Madrilenians. We are going to fight every battle to prevent it.”

In his speech, Díaz Ayuso pointed out that his government, which will only have nine ministries, “will influence a policy that works” and that makes Madrid the “national economic engine.” As he has defended, the taxation of the region is “the one that most resembles that of the rest of Europe” where, he recalled, there are no inheritance, patrimony or donation taxes.

In the event of interference from the Government, the popular leader has assured that she will go to court before any attempt to modify her fiscal policy because “a free Madrid without low taxes is not understood . “