Humphrey CarterMallorca-International30/12/2020 11:04
TW
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THE ins and out of the new Spanish budget, the first to have been finally approved since 2018, has a few hidden chestnuts, a bit like Brexit, which have yet to be fully explained.

Perhaps now is not the time for more bad news, but as thing stand, according to the new budget, there is going to be an increase on income tax for the highest earners, a hike on sales tax (VAT) for sugary drinks and new green taxes.

The headline is: the new financial blueprint replaces the 2018 plan approved by the previous Partido Popular administration, and is forecast to raise an additional €5.5 billion in revenues.

The budget includes a VAT rise for sugary and sweetened drinks, which will now be subject to a 21% rate compared to the current 10%.

And, the government has included a two-point rise in tax rates for earned income exceeding €300,000 a year, and of three points for capital income above €200,000. However, taxing this current financial year is going to be extremely complicated with so many millions of people on furlough and corporate fiscal breaks to be taken into account.

By the time it is time to make your tax returns, many businesses will have gone bust, millions of jobs lost and debts will be running through the roof.

It’s a bold budget but there may not be sufficient cash to go round to collect and help rebuilding the economy.