This week the Junta de Andalucía has announced it’s plans to enable the region to meet it’s deficit target of 1.5% of the regions GDP and it seems high earners are to be hit with a tax increase.
The plans, which amount to a total of around 2.5 billion euros will mean an average 5% pay cut for public employees, including the regional president and ministers. The hope is that this measure alone will save 780 million euros in personnel costs.
Other measures include a hold on all non-emergency public works which will save an estimated 570 million euros from the 2012 budget, which has been reduced to 29.5 billion euros.
For those people earning between 60,000 and 120,000 euros a tax increase will be implemented rising to 23.5%. Those earning in excess of 120,000 will see their tax rise to 25.5%. Currently those earning between 60,000 and 80,000 are taxed at a rate of 21.5%, while those earning between 80,000 and 120,000 pay 22.5% tax. The rate for earning over 120,000 is currently 24.5%.
I think this is the first measure taken that actually makes sense. To recognise that the higher earners can afford to pay a little more without damaging their bottom line is great. Low income families are the ones that are really struggling and to leave them out of the tax increases is commendable. It’s common sense really so it’s a shame it’s taken so long for government to realise.
Well done Junta de Andalucía – if you can only get the rest of Europe to follow this I’m sure things would get better quicker.