Business 03/05/2021

The Spanish government messes with the joint income tax return

The elimination of the bonus is included in the plan sent to Brussels

2 min
A citizen making the tax return, in an archive image.

BarcelonaCouples' recurring doubts about whether it is more profitable for them to do their tax returns jointly or separately may be coming to an end. The Spanish government has announced to Brussels in an annex to the recovery plan the gradual elimination of this option, which in practice offered bonuses to families in which one of the two members had a low income.

However, the executive said on Sunday that it would wait for the experts' opinion on the tax reform and that it would evaluate the measure "without increasing the tax burden on families," according to sources quoted by a few media. Even so, the annexes of the recovery plan are binding and the €140bn of the recovery plan depend on fulfilling promises made to Brussels.

"It includes the gradual disappearance of the reduction for joint taxation through the establishment of a transitional regime," the document details. The decision is justified by the fact that the bonus to couples generates "a disincentive to labour participation of the second recipient".

This bonus reduces the taxable base by €3,400 in couples not legally separated and currently benefits two million households. This means that one of the two members of the couple contributes as if they had received €3,400 less than their real income, with a loss of revenue that an Airef study placed at €2.3bn.

The beneficiaries are now 4.2 million people -2.1 million households, which represents 18% of taxpayers. The aforementioned Airef study stated that the measure did not promote inequality, although it did indicate that the main revenue losses occurred among families with higher incomes: "10% of the main income generates 19.5% of the total cost of the benefit (466 million euros)".

The measure that the executive of Sánchez wants to eliminate now benefits households in which only one person obtains income or in which the second has a very low income; otherwise, it would not be worth doing joint tax returns.

The Ministry of Finance, responsible for the proposal, says its purpose is to advance gender equality. According to the document, "a modern tax system must not exclusively provide revenue to finance public spending, but must contribute directly to enhancing the impact of public policies and must be a catalyst to achieve transformations in areas such as gender equality, care for the disabled, environmental conservation and health protection".

Various PP leaders criticised the measure yesterday and accused the government of "suffocating" the middle classes with "a covert tax increase". From the left, Íñigo Errejón (Más País) urged the government to rectify in order not to harm low incomes.

A measure for equality

Tax expert Albert Sagués explains that the joint declaration was devised to compensate those families in which the division of household chores entailed receiving a worse treatment from the Treasury, because a couple in which one member earned €50,000 and the other earned nothing paid more taxes than a couple in which both earned €25,000. The expert believes that the measure is reasonable if it is part of a plan to rethink personal income tax and is not just "a patch" to balance the public accounts.

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