The Minister of Finance, Arcadi España, has warned that the tax reform proposed by the far-right Vox would mean losing about 85,000 million euros in personal income tax (IRPF) collection, according to his department's estimates. The head of the Treasury defended taxes and public services this Wednesday against proposals for tax cuts, after demanding on Tuesday that their promoters explain what expenses they would reduce to compensate for that loss of income.
España spoke this afternoon at the CREO Forum, organized by 'Cinco Días' and Prisa Media, where he advocated for the State's protection for citizens and businesses in the face of crises. His warning places the debate on Vox's program on the budgetary consequences of its promises, with a drop in revenue that would force the search for alternative financing, increased indebtedness, or reduced spending.
The minister takes as a reference an annual collection of Personal Income Tax (IRPF) of around 140,000 million. With these magnitudes, the proposal would eliminate more than half of the tax's revenue. España already questioned the approach on Tuesday for what he considers a way to "destroy the IRPF" and asked for an explanation of what would happen with the financing of pensions, healthcare, education, and scholarships.
More savings for high incomes
Vox's proposal establishes a tax-exempt minimum of 22,000 euros annually and two rates of 15% and 25%, with the threshold between them at 70,000 euros. It also proposes reducing the applicable rate by four percentage points for each dependent. The change would reduce the progressivity of the tax, which currently increases the contribution as income grows, and would especially reduce the taxation of high incomes.
The examples presented by España show the difference between taxpayers. According to the minister, someone earning the minimum wage would save zero euros, while a person with an income of 100,000 euros would save 18,935. These are the cases that the Treasury uses to question whether the benefits of the reform are distributed equitably and to point out the significant savings that high incomes would obtain.
Vox has released a calculator that allows estimating net salary with its tax program and introduces variables such as income and family situation. The promise of earning more on the payroll is part of its electoral offer, but the balance for each household also depends on how the services it uses are financed. A family can benefit from a tax reduction and be affected by a reduction in scholarships, benefits, or public assistance.
The reform extends to other taxes. Vox proposes reducing the general VAT from 21% to 18% and Corporate Tax from 25% to 15%, in addition to reducing electricity and gas taxation. The estimate of 85,000 million presented by the Treasury corresponds solely to personal income tax (IRPF), within a program that proposes new revenue reductions through other means.
The cost for public services
España has compared those 85,000 million with all annual spending on education and about 80% of the country's healthcare spending. The comparison, presented by the minister, aims to show the size of the loss of revenue attributed to the reform. The specific effect on each service would depend on the budgetary decisions with which this decrease in revenue was compensated.
During his speech this Wednesday, he resorted to healthcare to explain what citizens receive in exchange for taxes. He recalled that an intensive care bed could cost 3,000 euros per night during the pandemic, without the patient receiving a bill for their admission. "If you have a serious illness, your family doesn't have to go broke," he argued, along with other examples such as operations, births, university scholarships, and public transport.
The warning also reaches the PP and the conditions of a possible alliance with Vox after the general elections on November 29. This morning, on 'La Hora de la 1', on TVE, España stated that "the author of the PP's electoral program is Vox," criticizing speeches that question the sustainability of pensions and the far-right's capitalization proposals. The Treasury demands that fiscal promises be accompanied by an explanation of their consequences for public accounts.
The minister has linked social protection with economic growth and accounts capable of responding to emergencies. At the CREO Forum, he defended that public resources allow action when citizens and companies need support. "Without growth there are no resources to protect and without healthy accounts there is no money for when the crisis arrives," he said.
