The Reality of the Tax Cut in Catalonia that ERC Boasts About

The Catalan government approves today the tax modification that will lower the personal income tax for the lowest brackets. The measure will benefit Catalan taxpayers with a taxable base of less than 33,000 euros per year. This accounts for 75% of the taxpayers in Catalonia, that is, 3 out of 4 Catalans.

The measure has been triumphantly announced by the general secretary of ERC, Elisenda Alamany. The tax cut aims to "reduce the impact of inflation on Catalan households," and is a "clear message to the middle classes."

Initially, the tax cut for the lowest bracket is good news for those who have long been bearing the weight of the crisis on their shoulders. But upon closer analysis, we realize that the benefits are relative. The measure will be only a small relief for those living in a true fiscal hell.

125 Euros in Savings in the Best Case

To begin with, it must be clarified that the Catalans who will see their personal income tax reduced are those who paid the most taxes in their bracket in all of Spain. In other words, Catalonia will no longer be the community where people with the lowest incomes pay the highest personal income tax in the entire State. This will be a relief, but still far from offering a comfortable situation.

Moreover, if we take the calculator, we see that the reduction is closer to a slight relief than to a significant cut. The one-point reduction in the lowest bracket means that those earning up to 12,500 euros will go from paying 10.5% in personal income tax to 9.5%. Up to 22,000 euros, they will pay 12.5%, and so on progressively.

With this reduction, a single person without children earning 25,000 euros gross annually will save 103 euros in personal income tax. The savings will be 78 euros for those earning 30,000 euros annually. In the best case, the lowest brackets will pay 125 euros less in taxes.

It is a slight change, still insufficient to mitigate the effects of the fiscal hell in the community where the most taxes are paid.

Insufficient Tax Cut

Catalonia is the community with the highest tax rates and the most own taxes in the entire State. An example is the inheritance tax, which in Catalonia remains the highest while in most communities there are bonuses. Another glaring case is the transfer tax.

The result is the renunciation of many inheritances and the disincentivization of the real estate market. In other words, the application of very high taxes in Catalonia seriously hinders the day-to-day life of Catalans and strangles the market.

ERC boasts about the reduction of a tax that was already the highest in the entire State. Precisely ERC is one of the responsible for the fiscal hell of the Catalans, since together with PSC and the Comuns they refuse to lower taxes as Junts and PP demand. The tax cut is insufficient because Catalans continue to pay more than the rest of Spaniards for doing the same things.