PUBLIC FINANCES

Galicia joins other PP-controlled regions in cutting personal income tax

The symbolic reduction will apply to those earning less than 17,700 euros a year

Santiago de Compostela - 15 Oct 2013 - 17:51 CEST

Galicia joined a growing wave of conservative Popular-Party-controlled regions in announcing a cut in the regional component of personal income tax (IRPF) for lower-income groups, albeit a symbolic one.

Speaking in the Galician assembly, regional premier Alberto Núñez Feijóo said the regional IRPF rate for those earning under 17,700 euros a year would be cut to 11.5 percent from 12.0 percent at present. Regional government sources said 70 percent of approximately 1.6 million Galician taxpayers would benefit from the cut, which will save those paying IRPF an average of 45 euros a year and up to 85 euros for those earning close to the limit of the upper tax bracket to which the reduction applies.

Feijóo took his lead from the PP premier of Extremadura, José Antonio Monago, who announced some months back an average annual cut in the IRPF paid by those earnings under 25,000 a year of 43 euros. The premiers of Madrid and Valencia, also from Prime Minister Mariano Rajoy’s ruling party, have also pledged to follow suit. “Galicia along with Extremadura will be the Spanish region where the lowest income groups pay the least amount of taxes,” Feijóo said.

Rajoy on Monday rejected pressure from some PP regional barons to bring forward negotiations on a new financing system for the regions and rejected claims that any new arrangement would favor Catalonia in an effort assuage the northeast region’s sovereignty aspirations. Feijóo said he backed a funding system based on solidarity in keeping with the “spirit and letter of the Constitution.”

Feijóo’s tax cut announcement came just days after the Galicia regional government announced a hike in a tax levied on gasoline and diesel to help finance healthcare. The regional premier also unveiled regional tax incentives for wind and biomass energy producers.