Catalonia Will Look For Alternatives After The Veto Of The TC

The Generalitat of Catalonia will look for “other ways” and mechanisms that compensate for the decision of the Constitutional Court (TC) to annul the reduction of personal income tax in Catalonia to the lowest incomes approved in 2020, due to the invasion of state powers, as explained on Monday by the vice president of Junts and deputy in Parliament , Elsa Artadi.

This reduction was part of the agreement between the Government of Junts and ERC with Catalunya en Comú Podem to carry out the 2020 Generalitat Budgets, which are still in force, since in 2021 there has been a budget extension.

The tax modification now annulled was more a political gesture than an economic reform, since it meant a saving of about 60 euros for some 200,000 taxpayers, who will not be affected by the court ruling with retroactive effects. The reason for the unconstitutionality of the measure is that the formula chosen by the Catalan administration was based on raising the exempt minimum to pay taxes -which went from 5,550 euros to 6,105 euros per year for incomes of 12,450 euros or less-, an aspect that is of state competition.

The Government resorted to the TC after unsuccessfully trying to reach an agreement with the Generalitat, and, after the annulment sentence, the Catalan administration will study other ways to benefit low incomes within the law, a strategy that it already followed after the annulments of other regional taxes due to their unconstitutionality, such as that of empty flats.

Autonomous section
In fact, Catalonia has room to lower the autonomous income tax bracket to the lowest incomes, which is the highest in all of Spain, although it discarded it in 2020 so as not to harm its tax collection levels.

In any case, the Catalan Minister of Economy, Jaume Giró, has reached out to the CUP to negotiate reductions in personal income tax for incomes below 30,000 euros in the Generalitat’s Budgets for 2022, whose project he will present this Tuesday in Parliament still without the support of the anti-capitalists, which ERC and Junts point out as a priority ally to carry out the accounts for next year.

For now, Giró rejects tax increases, with the exception of environmental taxes, in which the Generalitat does see scope to fight climate change. In fact, the last one to come into force, this year, on the CO2 emissions of vehicles, already foresees that the quota to be paid in 2022 will be higher than that of 2021. The figure has been criticized for being applied according to the type of vehicle model without taking into account its level of use, but only for owning it.

Salary increase for officials
The Generalitat has included in its Budget project for 2022 a salary increase of 2% for public employees, reaching the maximum allowed by basic state regulations, as announced this Monday by the Minister of the Presidency, Laura Vilagrà, at the Function Table Public.

It also plans to reactivate the payment of the productivity supplement, limited in recent years, and recover part of the amount for 2021.