Planned overhauls mean Spaniards to pay less tax in 2015

The Spanish government has outlined plans to overhaul the country’s tax system in an attempt to instigate domestic consumption to help Spain pull further clear from recession.

The current personal income tax model is to be completely reviewed for 2015, with Treasury Minister Cristóbal Montoro hinting at a change to tax thresholds and a reduction in the tax obligations of the average citizen…

Having emerged from a two-year recession last week, Spain’s ministers are eager to engineer a prolonged recovery, with some of the planned reforms finally giving hardworking Spaniards something to cheer about after a few years of austerity, spending cuts and tax hikes.

After the ruling People’s Party came into power in 2012, one of their first actions was to raise personal income tax in an effort to extract more money from the populace to salve the deficit crisis. These measures were extended to 2014, but Montoro’s proposed tax overhaul could bring an end to high taxes.

“This change will mean a reduction compared to 2014, on an equivalent basis,” said Montoro. “We’ve raised what we need to raise. We now need a recovery in consumption.” A delicate balance is called for, with ministers careful not to tip the fragile economy back into the red, but planning to put more money in the pockets of people is nearly always a good idea in political circles.

Spain’s tax take has fallen by €50 billion a year since the onset of the financial crisis, with total revenue standing at just 36.4 per cent of the country’s GDP in 2012, which is 10 per cent below the EU average.