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The Tax Authority estimates that there are 400,000 households that do not receive the minimum vital income and that they could receive it | Economy

The president of the Fiscal Authority, Cristina Herrero, and the director of the institution's Public Expenditure Evaluation Division, José María Casado.
The president of the Fiscal Authority, Cristina Herrero, and the director of the institution’s Public Expenditure Evaluation Division, José María Casado.Sergio Perez (EFE)

The Independent Authority for Fiscal Responsibility (Airef) has published its first evaluation of the minimum vital income (IMV), which guarantees a minimum income according to the members of the family unit from 462 euros to 1,015 euros. This benefit, which was approved during the pandemic and which supplements income until reaching these guaranteed minimums, has reached 284,000 beneficiary households at an annual cost of 1,600 million euros. Of the 1.5 million applications that have been, 975,000 have been rejected. Of these, 410,000 have been dismissed due to income criteria and 215,000 due to the cohabitation unit. The processing time has been accelerated from the 150 days that were needed at the beginning to the 60 days that were used in the second half of 2021.

In light of these numbers, the Tax Authority maintains that this scheme has helped reduce poverty. However, the body detects that it may have much more to go: it calculates with administrative data and from the Tax Agency that the beneficiary households could reach 700,000, without taking into account the Basque Country and Navarra, which manage their own minimum income systems and whose agencies Forales do not share the data. Consequently, there are some 400,000 families who could receive it and have not yet applied. If it were fully deployed, the benefit would have a cost of 2,800 million —3,200 million if the Basque Country and Navarra are included, communities with which the universe of potential beneficiaries would add 830,000 households—.

The aid only reaches, therefore, 40% of the possible beneficiaries managed by Social Security. In other countries, it is also common for there to be a significant proportion of households that do not request the benefit despite being potentially eligible according to administrative data. José Luis Escrivá’s ministry has even sent messages alerting citizens that they could benefit from the IMV and telling them how to process it. And in all this, it must also be taken into account that 113,000 households were automatic conversions that came from the previous child benefit.

How much, then, has poverty been reduced with the minimum income? To do this, the EU poverty risk indicator is taken, which is actually a measurement of inequality because it considers how many people there are below 40% of the median average income. That in Spain amounts to about 1.3 million households. So you’re covering 20% ​​of the families that are under that threshold. If fully implemented, it would reach 60% of those at risk of poverty, underlines Airef.

Another way to gauge the effect it has had on poverty is to see how many households are above 40% of the median income. The IMV does not manage to do much in this regard. The reason is that most of the minimum income that is guaranteed according to the members of the household is between 30% and 40% of the median income. It only does so in cases of single-parent families, for which the minimum income does slightly exceed 40% of the median.

On the other hand, if the gap is reduced until it reaches 40% of the median, then an improvement is estimated. If implemented to its full potential, it would reduce the difference by up to 20 points, staying about 20 points short of the figure that is now 40% of the median. Reaching only 40%, it is cut by less than 10 points and improves more in communities where benefits were low. Of course: since there are other minimum incomes managed by the communities, it is still necessary to see to what extent the IMV is replacing the benefits already granted by the autonomies. The Airef calculates that the minimum income extends the coverage of the communities by nearly 250,000 households. And if everything is transferred from the regional level to Social Security, the non-foral regions would obtain 1,680 million that they would no longer have to disburse for minimum income.

The fit between regional and national benefits is something that still has to be studied by the Tax Authority and on which more information is needed. In addition, the body chaired by Cristina Herrero proposes that indicators and objectives be specified to assess what is intended to be achieved with the IMV. It also defends that the definition of equity be reconsidered taking into account the liquidity of real estate. For example, in some autonomies financial assets are used but not real estate assets.

In the same way, it would be necessary to examine other types of vulnerabilities that may not be taken into consideration. And it should be analyzed if there are rejections by the unit of coexistence that are not justified. The Airef has detected that there are more problems of this type precisely in the communities where there is greater mobility, in Madrid and the Canary Islands, and that they could be attributed to registrations that are not properly updated.

In any case, the Tax Authority recommends that publicity be improved, bureaucratic barriers be simplified and the waiting time to obtain an in-person appointment be reduced. The body does not enter to assess whether some of the households that do not enter can do so because they have undeclared income that they do not want to be detected. The Authority observes that households that do not take the benefit and are able to do so in general already have declared income: “In particular, it is concentrated on those that would obtain a more limited increase in income in the case of being IMV beneficiaries,” says the report based on in administrative data. In fact, he points out that an important part already receives the unemployment benefit of 450 euros.

In the medium term, Airef advises that a benefit be made that is delivered ex officio without having to request it. The institution even defends integrating it with all the aid in the IRPF and that it can function as a negative tax like the Income Credit Tax in the United States or the Universal Credit in the United Kingdom. This would also avoid the stigma of asking for it.

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