Taxation is a relevant instrument for achieving public policy objectives and strategies.
That is why the OE2023 introduces tax changes to improve household income and the competitiveness of companies. And, as in the response to the pandemic, taxation also contributes to the imperative response to the short-term difficulties brought about by the invasion of Ukraine, but with the determination not to disregard the priority given to the competitiveness of companies, combating inequalities and increasing incomes, with confidence and predictability.
The SB2023 proposal presented by the government, which is actually anchored in a strategic agreement on competitiveness and income signed in the Social Concert, therefore includes relevant advances in fiscal policy.
First of all, in the IRS, with the update of the 5.1% brackets, the 2 pp reduction in the income rate corresponding to the 2nd bracket, and a new withholding model to end situations of regression in changing brackets through the adoption of marginal rates. Still on the IRS, and not forgetting the increase in exemption rates in the young IRS, the increase and reform of the minimum existence stands out, with more low-income families exempt from IRS and a new model also of marginal rates on income just above of this threshold.
But also on IRC there are relevant changes. First, the extension of the reduced rate of IRC of 17% for SMEs and for so-called small mid caps?? a new incentive for the capitalization of companies (ICE), with deductions for capital increases; the improvement of the Investment Support Tax Regime (RFAI) increasing from 25% to 30% the deductions for collection on investments of up to 15M€ in the convergence regions; or even with the new tax regime for the deduction of losses. And, in conjunction with the income agreement, the stimulus to wage increases above 5.1% with a 50% increase in these costs.
“The OE2023 reinforces an idea of taxation at the service of people and companies, to respond to the short term, but also to the country’s strategic challenges.”
There are advances towards fairer and more transparent taxation, creating a temporary contribution on extraordinary profits in line with European decisions and, also, a new tax regime for crypto assets, until now unregulated.
But the PS Parliamentary Group also decided to present solutions to improve the initial Budget proposal to reinforce the dimension of taxation in strategic areas.
First, in the fight against fraud and evasion. With the deepening of the crypto asset regime, ensuring that subjects residing in tax havens are covered and that the taxation applied to mining is 95%, since it is typically an activity with a strong ecological footprint. In terms of IMT, with the end of “technical exchanges” that illegitimately take advantage of exemptions for property exchanges.
But we also made progress in the housing market and in supporting access to housing, increasing the powers of the municipalities to, in areas of urban pressure, increase the IMI on properties that are not available for permanent own housing and in particular Local Accommodation, at the same time as the limitation of tax benefits to landlords is deepened to prevent practices of evading the 2% ceiling on rent increases.
These are just a few examples of a guiding line of this Budget in the fiscal dimension: the SB2023 reinforces an idea of taxation at the service of people and companies, to respond in the short term, but also to the country’s strategic challenges.