Spain’s leftist government said Thursday it will cut the income tax on lower-income households to help hard-hit consumers grapple with soaring inflation.
The government will reduce the income tax on people earning up to 21,000 euros ($20,200) per year, or one in two workers, Budget Minister Maria Jesus Montero told a news conference.
At the same time, she confirmed the government will slap a new tax in 2023 and 2024 on residents whose wealth exceeds three million euros to help pay for inflation relief measures.
This so-called “solidarity” tax will affect some 23,000 people, or 0.1 percent of taxpayers, and raise 1.5 billion euros for state coffers over the two years, she added.
Prime Minister Pedro Sanchez’s government announced last week that it would create a temporary tax on the wealthiest population without giving details.
“Since we began governing, we have been working to make our fiscal system more progressive, efficient and strong enough to support social justice,” Montero said Thursday.
The announcement of the tax changes comes as Spain is gearing up for local elections in May 2023 and a general election expected at the end of next year.
Spain is battling a surge in inflation as a result of the fallout from the war in Ukraine and the reopening of the economy after pandemic-related lockdowns.
The country’s inflation rate eased to 9.0 percent in September as energy prices fell, down from 10.5 percent in August, but remains high.