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Individual Taxpayers Still In Focus

Kitty Miv, Editor
05 November, 2020

With the results of the US Presidential election remaining, at the time of writing, too close to call, we are going to refrain from trying to do so in this week's column.

Last week we looked at the significant crop of COVID-related measures springing up around the world that are designed to mitigate the impact of the pandemic on individual taxpayers, and this week there look to be more of the same, perhaps unsurprisingly, as the virus stages something of a resurgence globally.

In Bolivia, following their own presidential polls, newly-elected President Luis Arce stated that he intends to introduce a wealth tax and reduce value-added tax on credit card payments when he assumes office.

According to reports, Arce has said that a progressive wealth tax will be imposed on those with wealth of at least USD5m, and that the rate of VAT on purchases using a credit card will be reduced from 13 to eight percent. Arce has also mentioned that VAT refunds will be made available for those on low incomes.

In Syria, meanwhile, a tax cut for the country's poorest citizens was on the cards, with President Bashar al-Assad issuing a decree to reduce personal income tax for those on low incomes.

Under the measures, the first SYP50,000 of monthly earnings will be exempt from income tax, up from SYP15,000 currently. At the same time, the lowest income tax bracket will be reduced from five to four percent.

Then in Spain, the coalition Government released its draft 2021 Budget, although the passage of the legislation requires the support of Congressional lawmakers, and is therefore not yet a done deal.

However, the Budget (as proposed) includes proposals to tighten the country's international tax regime and for a three percentage point rate hike for capital income in excess of EUR200,000.

Further, the Budget includes a two percentage point increase to personal income tax on those with income above EUR300,000 and a one percentage point increase to the wealth tax, affecting those with assets worth more than EUR10m.

In Europe more broadly, taxpayer rights were under the spotlight, with the European Commission launching a four-week-long consultation on an initiative to improve the respect and implementation of taxpayers' rights under EU law.

The initiative is proposed to increase EU taxpayers' awareness of their rights under EU law in the field of taxation, and to ensure EU countries respect and implement them. To this end, the Commission will analyze taxpayers' rights in the EU single market, specifically those of individuals, the self-employed, and micro-businesses.

And finally for this week, the Government of Jersey recently published additional information on possible payment options for taxpayers as it plans to move all islanders to the Current Year Basis (CYB) for paying income tax.

Currently, around two-thirds of taxpayers pay their taxes in arrears, under the Prior Year basis (PYB) system. Due to the COVID-19 pandemic, the Government has brought forward plans to put all taxpayers on the CYB for paying income tax.

If the proposals are approved by the States Assembly, the move to the CYB would mean that PYB taxpayers who "pay on account" could defer their November 2020 payment. The Government said that PYB employee taxpayers who have seen their income reduce during 2020 are more likely to have a lower Income Tax Instalment System (ITIS) rate in 2021 and lower monthly tax deductions from their salary. It added that if the proposal is not passed, these taxpayers are more likely to have an increased ITIS rate in 2021.

Under the proposals, PYB taxpayers would have the tax payments they made in 2020 (for 2019 tax bills) used to pay their 2020 tax liability. Their remaining 2019 tax liability would be frozen and paid in the future.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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