The Tax agency has collected in the first six months of the year 49,931 million euros for personal income tax, 11.1% more than in the same period of the previous year, and a figure that anticipates a new record for the whole year.
This tax is the one that is contributing to the public coffers the most amount of income, due to the employment improvement, since the more people are working, the more the State collects for personal income tax; and to the salary increases, which have been around 5% in the first half of the year. When a worker’s salary rises, the effective rate of personal income tax increases, since the tax rate is structured in brackets and is progressive (the higher the salary, the higher the tax rate).
This increase in revenue is influenced by the fact that the Government has refused to deflate the personal income tax to prevent wage increases that have been equal to or less than inflation from being exposed to higher rates, since in practice this implies that the worker does not experience a gain in purchasing power but does have to pay more to the Treasury. Economists and experts, as well as the opposition, have asked the Executive to deflate the rate and the sections, even if it was in the first layers of income (up to around 40,000 euros), but it did not want to do so, so it has produced “an increase in the effective rate” that is applied to personal income tax. By paying taxes at a higher rate, on average, the amount collected grows.
“Withholdings linked to wages continue to grow above 9%, with an increase in the wage bill of more than 7% (with wage increases around 5.5% and employment growth close to 2%) and a rise in the rate greater than 2% in cash”, explains the body attached to the Ministry of Maria Jesus Montero.
the union of Finance Technicians (Gestha) has calculated for EL MUNDO that the Tax Agency could enter 2,114 million euros less per year for personal income tax if I had deflated the scale of the tax based on average inflation used to revalue pensions (8.5%), based solely on the impact on employees -with salary data from 2021- and without taking into account the effect of the measure on pensioners; with what the decrease (and savings for taxpayers) would be in practice higher.