From 36 euros in Andalusia to 821 in Castilla y León. These are the amounts that the taxpayers of both communities, on average, have deducted in the income statement for the birth or adoption of a child, according to the latest data from the Tax Agency. What explains so much difference? Because each territory establishes its own regional deductions in personal income tax. Some of them are common to all regions, especially social and family ones —birth, assistance for people with disabilities, school expenses…—, although the requirements to access them and the amounts vary. Others are specific to each autonomy. In total, there are more than 200, many with a limited scope both in amount and in number of beneficiaries. “It’s a labyrinth,” says Luis Del Amo, technical secretary of the Registry of Tax Advisors of the General Council of Economists (REAF-CGE).
The numbers speak for themselves. Of the more than 21 million income tax returns filed in 2020, the latest statistics available, only 1.8 million taxpayers applied regional deductions, for a total amount of 413.9 million and an average of 220 euros per head —the statistic does not include Navarra and the Basque Country, with their own regime. The 2019 data, free of the distortions that the pandemic could have caused, show similar results: 1.7 million filers took advantage of this aid, with an average fee of 238 euros.
José María Mollinedo, general secretary of the Treasury Technicians Union (Gestha), explains that the proliferation of rent reductions promoted by the communities has been gradual over the years. “They are usually created, but not deleted, because there is no control after the fact,” he explains. “And there are other problems: they are applied to people with income, and the most vulnerable do not reach the sufficient threshold, and many times they are not requested due to ignorance. The taxpayers confirm the draft of the rent and that’s it. For this reason, they are not always effective public policies, because they are not going to benefit those who really need it”.
Just these days a controversy has broken out about public aid that is also granted to the richest. The debate has exploded after learning that several deputies of the Madrid Assembly are eligible for the social bonus, a reduction in the energy bill, just for being part of a large family. This group is entitled to various aids, including a state deduction in personal income tax that does not discriminate based on income. In addition, six communities recognized an autonomous tax relief in 2020: Asturias, the Canary Islands, Castilla y León, Castilla-La Mancha, the Valencian Community and Galicia.
impact differences
The Valencian Community has the highest number of autonomous deductions, around thirty, followed by Castilla y León and the Canary Islands. Catalonia, Extremadura and Madrid are at the other extreme. In this tidal wave of rebates there are some that reach so few taxpayers that the number of beneficiaries is considered a statistical secret. Otherwise, it would be easy to know who it is. This is the case of the rebate recognized by Asturias for the certification of sustainable forest management, the only one that contemplates a deduction of this type, that of Aragón for investing in shares of entities that are listed in companies expanding on the stock market, or that of Balearic Islands for donations, transfers, loan contracts and agreements related to sports patronage.
Among the deductions that less money is assigned per taxpayer, there is an average of 25 euros for donations for ecological purposes in Aragon, a figure that in the Canary Islands was 14 euros in 2020 for the same concept. In Catalonia, the average amount for donations to certain entities for the benefit of the environment and natural heritage was 12 euros. In Murcia, the average deduction for investment in domestic water-saving devices did not reach 40 euros.
However, the quota and the number of contributors are not necessarily proportional. In Galicia, for example, only 19 people deducted their investment in newly or recently created entities, but the average amount exceeded 3,000 euros. In fact, several communities contemplate this deduction, and the average amounts deducted are among the highest: in Andalusia and Aragon they exceed 1,000 euros, in the Balearic Islands they are close to 2,000. The opposite example can be the 18 euros on average that 127,485 people have deducted in Catalonia for donations to entities that promote the use of the Catalan or Occitan language, or the average 164 euros deducted for educational expenses by almost 190,000 taxpayers residing in Madrid.
The deductions with the greatest impact vary according to the territory, although those linked to housing or family situation tend to be the most common and relevant, and in many cases they reinforce the state deductions dedicated to the same matter. In Andalusia, the most substantial in amounts and numerous in taxpayers is the one recognized for people with disabilities (almost 59,000 taxpayers received it, for a total fee of six million euros). benefited 57,688 citizens in 2020, more than 60,000 in the case of the Valencian Community.
Efficiency
The logic of tax benefits, be they reductions in tax rates, deductions or bonuses, is usually found in the support of policies or activities considered strategic or aid to specific groups. It happens with all the big taxes, from VAT —for example, health care is exempt and tourism is taxed at 10% and not 21%— to personal income tax. But, while only the State can modify taxes such as VAT or Companies, the communities have jurisdiction over 50% of the income tax scale —half of the section is autonomous and the other half, state—, in addition to the minimum personal and family
“There is a hyperinflation of regional deductions that in some cases affect few people, and in other cases their economic content is minimal,” Del Amo insists. “For example, the deduction for housing in small remote towns may be a good idea, but the incentive must be strong enough so that depopulated areas are revitalized. Another thing that is missing is that the effect of this policy be analyzed. There would have to be an analysis after the fact, ”he continues.
The evaluation of public policies is, in general, one of the great pending tasks. The Tax Authority (Airef) is in charge of this —it has already analyzed 13 tax benefits, 60% of the total, but none of it in the regional personal income tax—, but the Government often ignores its recommendations. “There is no ex-post control of deductions, neither state nor regional, when it should be the norm. If there are less than 100 beneficiaries, they could be suppressed”, emphasizes Mollinedo. “In its place, direct aid could be given. But the Administration has to be endowed so that the same thing does not happen with the minimum vital income, which at first reached very few people ”.
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