The Valencian President Of The PSOE Disregards Sánchez; Also Cuts Income Tax, Like The PP

XimoPuigXimo Puig, president of the Generalitat Valenciana

The president of the Generalitat Valenciana, Ximo Puig, plans to save 150 million euros (3.6% of tax revenue) for 1.34 million Valencian taxpayers (97.4% of the total) with a retroactive reduction in personal income tax, an increase in the minimum exemptions and a 10% rise in all regional tax deductions. The reduction is more ambitious than the PP’s deflations, very focused on reducing wealth, and contrasts with the Treasury’s refusal, which focuses on taxing wealth more.

Pedro Sánchez’s government has spent weeks accusing the PP of having undertaken a “disastrous” downward tax competition between autonomous regions. It has rejected Alberto Núñez Feijóo’s proposal to provide state-level “tax relief” similar to that of Valencia for incomes of less than 40,000 euros.

The measure promoted by Puig raises the stakes of the tax cuts advocated by the PP, which in the case of personal income tax has proposed updating the rates with inflation for the brackets that comprise up to 40,000 euros of gross salary. The aim of this deflation is to avoid so-called cold progressivity. This is the covert tax increase caused by the rise in salaries and prices that makes a taxpayer jump from one personal income tax bracket to another despite his or her loss of purchasing power.

For the moment, Andalusia has announced that it will deflate the first three income tax brackets (up to 40,000 euros of gross salary) to 4.3%; Madrid and Murcia will do so at 4.1%, and Galicia detailed this Tuesday that it will do the same for incomes of up to 35,000 euros. It remains to be seen what decision Castilla y León, the other region governed by the PP, will take.

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