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Wednesday, May 25, 2022
HomeLatest NewsHouseholds face financial pressure eighty times greater than wealth

Households face financial pressure eighty times greater than wealth

Family income supports fiscal pressure is eighty times stronger than the state. Such is the magnitude of the disproportion between the current types of taxes paid by one and the other, according to the Tax Agency.

Fiscal Year 2021 Annual Fee Report released this Friday places an effective personal income tax rate of 13.17% and at the rate of 15.3% VAT, which is levied respectively on personal and family income (depending on whether an individual or joint declaration is filed) and consumption.

Effective rates are a measure of the fiscal pressure or tax burden actually borne by taxpayers by indicating the percentage of taxable income or consumption that is paid as a tax; in other words, the Treasury takes 13.17 out of every hundred euros that a person who has to file an income statement earns and 15.30 out of every hundred spent on their various uses.

“Estimated to have an effective average income and expense rate of 15.3% in 2021, up 1.8% from 2020,” reads the report, which puts the average income tax rate at 9.15% . on the profits of companies and 21.43 if this is done on the so-called tax base, which is the amount resulting from the application of reductions and deductions to the former. Fork excises on energy, alcohol and tobacco it increases from 0.09% to 9.49%.

This, as reflected in the table prepared by the tax authority itself, makes it clear that tax pressure household incomes are up to 43% higher than those of companies, although consumption pressure is slightly lower due to higher household demand than business demand for essential goods taxed at ultra-low VAT rates.

However, the big difference between the tax burden is not the one that occurs between households and companies, since inequality within them more intense than the smaller sizeand between families and states: there the gap reaches a disproportion of 82 times.

The gap between households and businesses reaches a disproportion of 82 times

This estimate, which reaches an imbalance of 95 times with consumption (VAT) and 57 times with business (society) profits, is based on comparing the fiscal pressure of these taxes with property tax burdenwhich remains at 0.16%, according to the tax agency itself: over the past five years, according to reports, the collection received from assets and rights, which increased from 582,612 million to 730,474 (+147,862) – only increased by 216, rising from 1003 to 1219 per year between 2015 and 2019, when that pressure even dropped by one hundredth.

The main reason for these differences is the low taxation of large estates, exemptions that cover almost 60% of these goods and rights and to bonuses applied by some communities that cut the fee by almost half.

In this sense, the Community of Madrid itself, whose president Isabel Diaz Ayuso, has just demanded “over a billion” from European funds from the central government in order to mitigate the effects of the rise of light in the metro and finance the reception of Ukrainian refugees, accumulate 96.8% of these bonuses by forgiving the wealthy 989 of the 1,021 million euros they avoid paying throughout Spain in this tax.

Various international organizations, including the OECD and the World Bank, as well as numerous experts and think tanks, including the committee of wise men who developed the foundations of tax reform in Spain, converge in advocating two recipes, to which in Spain the harmonization of rules between territories is added to try to guarantee the resource needs of states (and their citizens) in the face of the demands of crises unleashed pandemic, inflation and globalization flu: Establish a global type in companies to stop evading countries with low tax systems and expand the tax base, increasing pressure on big fortunes.

“Now you can think not about tax cuts, but about increase bases where there is margin“, says Susana Ruiz, responsible for tax fairness at Oxfam-Intermón, who advocates doing this “for the highest returns” and their assets.

“This inflation is reducing the spending and savings capacity of half the country, but not the other half,” he points out, as evidenced by a $45 billion increase in bank deposits over the past year, while families are forced to juggle to make ends meet and SMEs are facing a drop in consumption after having increased their debt during the pandemic.

SMEs face falling consumption after rising debt during pandemic

“Public action during the pandemic has focused on support family income and keep SMEs afloat with ERTE and ICO guarantees, but this, which also outlasted the consumption that later fueled the recovery, was done by creating debt and deficits, and now the mechanisms that allow prices to be contained cost a lot of money. And all of this has to be offset,” explains Ruiz, who also warns that “if interest rates finally rise, growth will be stifled.”

This is without forgetting two other factors such as the inflammation that inflation causes in tax collectionas well as in GDP estimates, and the carryover effect of the entire package of measures in the context of the pandemic crisis and rising prices.

“Perhaps what we have now is a kind of fiscal bubble in which higher incomes will not lead to more public services because part of this money should go to pay off debt and deficit that were created to pay for these measures,” concludes Ruiz.


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