The cost of the reduction in personal income tax for 2.6 million taxpayers promoted by the Government of the Generalitat rises to 55.7 million euros, as stated in the Report on the impact evaluation of the law to accompany the budgets that it analyzes the Consell de Treball Econòmic i Social de Catalunya (CTESC). The proposal is to lower the first tax bracket of the regional scale from the current 10.5% to 9.5%.

According to the aforementioned Report, the impact of the loss of revenue will not occur until 2026, when the financing model corresponding to 2024 is liquidated. The idea of ??the Minister of Economy, Natàlia Mas, is that the tax reduction will be apply retroactively to January 1, 2024 regardless of when the law is approved. Yesterday, the councilor indicated that the 2024 budgets will not be approved before the end of the year and it will be necessary to carry out a technical extension of the current ones.

The Report highlights that the maximum tax reduction per year will be 109 euros in the case of a taxpayer with a taxable base of 23,000 euros. The gross salary is always somewhat higher than that amount. The beneficiaries of the reduction are about 2.6 million people, equivalent to 73% of total taxpayers.

For the rest of taxpayers, the measure will be neutral or will imply a slight increase in fees. The Government wants to touch the average rates by a few tenths so that high-income taxpayers (around a million people) do not benefit from a reduction or a slight increase in taxes. According to the Report, in any case, the largest increase in taxation will be only 43 euros per year.

The largest reduction in the income tax corresponds to taxpayers with a tax base of 12,500 euros, who will pay 5% less than until now. The measure will not be noticeable in the pockets until the 2024 income tax return is made, in April of the following year.

Before the legislative change that the Government wants to promote, Catalonia had the highest tax bracket of all the autonomous communities, which “harms lower-middle incomes,” as noted in the Report. The marginal rate of the last four tranches is maintained.

The other fiscal measure highlighted in the accompanying law is the expansion of the housing deduction for certain groups, such as young people or the long-term unemployed. The impact of this legislative change on the accounts of the Generalitat is 14.4 million euros.

The tax reduction was generally well appreciated by parliamentary groups and employers’ associations. The unions ask that the loss of income be compensated with an increase in the tax pressure on high incomes.

Before the cost of the measure became known, the Chamber of Commerce of Barcelona estimated that the favorable context of increased tax revenue means that the tax reduction does not significantly reduce collection or put budgetary stability at risk.