The Spanish government on Thursday confirmed that its forthcoming 2022 budget will include an increase in tax contributions for the country’s autónomos (self-employed workers).
The budget approved by Spain’s Council of Ministers reflects the increase of the minimum contribution to €960.60 per year, at a rate of 30.6 percent, which represents an annual increase of €96.
Self-employed workers who’ve been registered as self-employed for a couple of years currently pay €286 a month on average, whereas new autónomos pay monthly contributions of €60 for the first year, a figure which then rises progressively.
The maximum contribution base has also increased to €4,139.40.
The change will affect almost 2 of the approximately 3.2 million self-employed workers in Spain, including many foreign workers.
It is estimated the hike will earn the Spanish government up to €173 million extra in social security contributions.
Understandably, the proposal has been met with opposition by self-employed workers.
The announcement in late September that Spain’s minimum wage would rise by €15 a month with immediate effect had already alerted autónomo associations that this would result in the increase of monthly contributions for the country’s self-employed workers.
This is the case because Spain’s minimum wage sets the minimum social security contribution base for workers, but as salaried employees have their social security paid by their companies, only autónomos will feel this minor pinch.
Spain’s national autónomo association ATA had estimated the increase would be “between €3 and €12” before Spain’s Social Security department confirmed on Thursday it would be €8.
Another self-employed workers group, the Unión de Profesionales y Trabajadores Autónomos (UPTA), has decried the rise in contributions at such an economically precarious time as Spain begins its Covid-19 economic recovery.
“We do not understand the repeated refusal of the Ministries of Economy and Finance to put a stop to one of the greatest fiscal injustices suffered by the group of self-employed workers,” said UPTA president Eduardo Abad.
“We are astonished,” he went on to say, “that no political party has taken a single step to try to solve it.”
Lorezo Amor, President of ATA, another prominent self-employed workers group, also criticised the timing of the move: “There is no doubt that this is not the best time to increase self-employed quotas,” he said.
The government, however, claims that the increase in both base levels – the minimum and maximum contributions – are in line with inflation forecasts and do not, according to Minister for Social Security, Israel Arroyo, represent a “rise in real terms.”
The increase, expected to come into effect from January 1 2022, will affect most self-employed workers by an average of an 8 euro increase a month, capped at €294 a month for top earners.
But the vast majority of self-employed workers are already forced to pay the lowest rate: it is estimated that 85 percent of Spain’s self-employed pay the lowest available contribution rate.
Spain’s freelance workers pay some of the highest rates in Europe, far above those in the UK.
Yet these freelancers will now have to pay more, regardless of their income and uncertainty following the pandemic, and both freelancers and unions believe the change is fundamentally unfair. “Those with lower incomes are harmed,” Abad said, “as they have to make a contributive effort that is above their possibilities”.
Article by Conor Patrick Faulkner