Valencia cuts income tax on annual earnings below €60,000

Valencia’s regional president Ximo Puig has announced a reduction in income tax for the vast majority of taxpayers as part of a package that includes free transport and other tax benefits for residents of the Comunidad de Valencia. Eugene Costello reports…

Valencia will cut income tax on all annual earnings of less than €60,000 euros, president Ximo Puig announced yesterday in a speech in the general policy debate at the Comunidad de Valencia parliament, the Consell. Las Provincias somewhat cynically described the move as “a way of distancing himself from the doctrine of the President of the Government, Pedro Sánchez, to try to save the Generalitat in the next elections”.

The tax reform will come into force in 2023, when Valencians make their income tax – right “in the middle of the election campaign”, notes Las Provincias archly. The amount exempt from taxation for all citizens will rise by 10%. This is the maximum the law allows, Pigo said, and “will benefit all citizens”. Those with incomes of over 60,000 euros will not be affected by the move, said Puig. He avoided the term “deflation of personal income tax”. This is because it is a term linked to the tax cuts that have been announced recently by the autonomous regions governed by the centre-right Partido Popular (PP). Nevertheless, the announcement by the head of the Consell was applauded yesterday by the whole of the national centre-right, from the president of the PP, Alberto Núñez Feijóo to Edmundo Bal, of Ciudadanos.

In detail, under the new regional income tax scale, incomes of €10,000 euros per year will save 21% (€94.5 euros), although according to the Generalitat’s income tax scale, they are exempt up to €12,450. Those on €20,000 euros will save 7.3 % (€117), and those on €30,000 euros will save 2.2 % (€67 euros). “This will improve the progressivity of the tax,” said the head of the Consell.

All tax deductions and allowances will see the following measures: all deductions will rise by 10%: (the tax deduction for children, for renting a home, the deduction for large or single-parent families, the deduction for work and family life balance, or the deduction for nursery or school expenses for children under three years of age. However, the income eligible for these deductions has risen. From now on, the income that can benefit from the deduction will increase from €25,000 to €30,000 euros.

In addition, Puig announced that the Generalitat’s public transport will be free for under-30s from 9 October until 31 December. And there will be a new deduction of 100 euros for mortgages for individual incomes of up to €30,000. And one for joint taxation of €47,000.

But Valencia to cut income tax is just one part of the giveaway. There were also important announcements in the health sector. The waiting lists are a “cause for concern” for citizens and for the government. “The first,” Puig said yesterday, was due to the “exceptional situation” after the pandemic. The Consell will amend decree 97/1996 so that a patient needing an operation for the most prevalent pathologies and is going to have to wait more than 60 days, can choose the option “from day one” of having the operation in the private healthcare sector.

“This exceptional measure will come into force in December. It will last for the necessary period until the waiting list is normal again,” said Puig. The Consell will also introduce a tax deduction for fertility treatments.