The PP gave away yesterday the first details of the tax cut offer on the Income Tax (IRPF) with which the government has wanted to give an answer to the retired people´s demonstrations for the lean pension revaluation (0.25%): this means that the pensioners with up to 17,000 euros yearly incomes will stop paying taxes. Therefore, in Asturias about 40,000 taxpayers would be rendered tax exempt.
Javier Maroto, PP vice secretary of Social and Sectoral Policies, exposed yesterday: "Mariano Rajoy has eliminated the Income Tax for all the pensioners who have a pension below 860 euros per month (what corresponds to 12,000 euros per year divided into fourteen pays). We want to make that elimination extensive to 17,000 euros pensions. That means, to make pensioners earn purchasing power by not paying the tax".
If the proposal prepared by the Treasury is specified in the terms anticipated by Maroto, retired people and pensioners with incomes between 860 and some more than 1,200 euros per month would render exempt of paying the Income Tax. About 15% of the over 300,000 pensions earnt in Asturias would be in that range. The economic outreach of this tax cut will depend, among others, on the family circumstances of each taxpayer. According to the estimate made by the Register of Economists and Tax Advisors (REAF) which show in the attached graph, a person from Asturias who earns 16,000 euros and lives alone pays regional taxes of 1,473 euros. That would be the saving in the case of being a pensioner and whenever the exemption would apply to the national as well as the autonomous sections of the tax liability. This would also require a decision from the Parliament of Asturias. Were that not the case, the tax saving would be about 700 euros.
One of the aspects which Javier Maroto did not specify is whether that tax cut is thought exclusively for pensioner or also for current employees and self-employed. To start with, the amendment the PP agreed with Ciudadanos for the 2018 General State Budget meant to render taxpayers with incomes between 12,000 and 14,000 euros exempt and to establish other tax credits to those up to 18,000 euros, with progressive criteria (the higher the income, the lower the credit).
Rajoy announced last week, during the debate about pensions in the Congress, tax cuts for the pensioners and additional rises for the lowest and widowhood pensions. Rajoy has subordinated those improvements to the reaching of a political agreement to approve the public accounts for 2018.