Raises public sector pay and pensions and updates taxes for 1996

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1. Public sector employees' pay rises by 3.5% from January 1, 1996 compared with 1995.
2. Pensions received as of December 31, 1995 rise by 3.5%, and so do minimum pensions, non-contributory pensions and social benefits for people with HIV.
3. The State assumes the debt of companies under the Agencia Industrial del Estado (337,905 million pesetas) and of Radiotelevisión Española (110,693 million pesetas) with effect from January 1, 1996.
4. For personal income taxincome tax The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings. (IRPF), the individual and joint tax scales, family deductions and the reduction of net income under the objective estimation method are updated; that reduction is 8% in 1996.
5. For IRPF, income imputed for urban property used by its owner is calculated on the cadastral value, at a rate of 1.10% for properties whose cadastral values were revised from January 1, 1994.
6. Cadastral values for the property tax (Impuesto sobre Bienes Inmuebles) are updated with a 3.5% coefficient, and the fees of the business activity tax (Impuesto sobre Actividades Económicas) also rise by 3.5%.
7. The special tax on certain means of transport drops 5 points for cars with gasoline engines under 1,600 cubic centimeters or diesel engines under 1,910, which now pay 7% in the peninsula and the Balearic Islands.
8. Social Security contribution bases rise by 3.5% to offset the pension update, and the legal interest rate on money is set at 9% through December 31, 1996.

Who it affects

• Public employees and staff of public companies: Their pay rises 3.5% in 1996; subsidized private school staff and universities have their own rules.
• Pensioners: Their pensions and related benefits rise 3.5%, with a one-time payment in 1996 to make up 1995 differences.
• IRPF and wealth tax taxpayers: Scales, deductions and brackets are updated to keep pace with inflation.
• Homeowners and self-employed people: Imputed property income changes and the 8% reduction under the objective estimation method applies; cadastral values and business activity tax fees rise.
• Car buyers: The special tax on means of transport drops 5 points for small gasoline or diesel cars.

Words worth knowing

Prórroga presupuestaria (budget extension)

If no new budget is passed, the previous year's budget keeps applying. That is what happened with the 1995 budget.

Deflactar (indexing for inflation)

Adjusting tax figures (brackets, deductions) to offset rising prices.

Valor catastral (cadastral value)

The value the Administration officially assigns to a property, used as the base for several taxes.

Estimación objetiva por módulos (objective estimation by modules)

A way to calculate some self-employed people's profit using signs, indexes or modules set by the Administration, instead of actual income and expenses.

Aval del Estado (State guarantee)

A guarantee under which the State pays a debt if the borrower cannot.

income tax

The personal income tax (IRPF in Spain): what people pay on what they earn from work, business or savings.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries