On Tuesday, the Congress of Deputies approved a non-law proposal from the PP that aimed to combat inflation by deflating personal income tax at the national level. Deflation involves adjusting the income tax to inflation so that rising prices do not result in a tax increase, preventing workers who have received a salary increase to compensate for rising prices from having to pay more taxes, thus losing purchasing power.
The PP initiative also includes deflating the taxpayer’s minimum tax, adjusting deductions and withholdings to provide immediate tax relief for families. This comes in response to the inflationary spiral observed in the last three years, particularly impacting food and mortgage prices.
The proposal was supported by the PP and Vox, with three of the Government’s usual partners, PNV, Junts and BNG abstaining. The rest of the Chamber, including PSOE and Sumar voted against it. Juan Bravo, PP’s economic coordinator argued that leaving more disposable income in the pockets of Spaniards would lead to increased consumption.
However, PNV expressed support for deflation as a way to maintain the same level of taxation as if inflation did not exist but criticized the PP for equating deflation with tax cuts and abstained from voting on it. On the other hand, PSOE and Sumar criticized it for being regressive and benefiting wealthier individuals more. Patricia Blanquer from PSOE pointed out that PP had previously voted against aid initiatives for families making this current proposal questionable.
