New income tax breaks will benefit families

13th February 2006, Comments 0 comments

13 February 2006, MADRID — Income tax changes due to come into force next year could bring benefits to 90 percent of contributors.

13 February 2006

MADRID — Income tax changes due to come into force next year could bring benefits to 90 percent of contributors.

Those with larger families and lower incomes are set to be the biggest winners from the Socialist government's tax reforms.

One example would be married couples with two children who earn a total of EUR 30,000 a year together.

They are likely to save EUR 160, while a similar household with EUR 18,000 will save EUR 285.

Those who earn less than EUR 9,000 will not pay any income tax from 2007.

The reduction will cost the tax office some EUR 2 billion out of the EUR 50 billion it collects from Spain's EUR 16 million tax payers.

The government mainly wants to help families with its income tax changes.

For those with incomes of EUR 30,000 and EUR 18,000 but with no children, the savings will be EUR 61 and EUR 69 respectively.

But lower income families earning EUR 18,000 but with three children, will save EUR 447 year.

The reform sets the lowest income at which tax must be charged – EUR 9,050.

Previously, the starting point for income tax was EUR 6,900.

Now families with two children and declaring jointly will not have to start paying income tax until they earn EUR 16,250, up from the previous figure of EUR 13,200.

The government expects to see the new tax code approved by the cabinet by 10 March, then the proposed changes will be put before Congress.

It is expected they will come into effect in January 2007.

They will then be applied to earnings from that year and levied on tax declarations made for 2008.

[Copyright EFE with Expatica]

Subject: Spanish news

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