A proposed tax reform which aims to raise the tax-free income threshold will lead to higher taxes for pensioners, the unemployed, and those receiving sickness benefits, several organisations warned on Monday.
The Arizona government’s reform plans include increasing the tax-exempt portion of income from €10,910 to €15,600 by 2030.
However, this increase will only benefit workers, not pensioners or recipients of replacement incomes, according to organisations representing elderly people and the chronically ill. Anti-poverty networks such as OKRA, Enéo, Samana, and BAPN also raised concerns about the reforms.
They argue that pensioners and recipients of replacement incomes will not see the benefits because any increases in tax exemptions will be offset by reductions in existing tax credits for their allowances.
The organisations also raised concerns about an additional tax burden introduced from 2029. This measure, aimed at preserving local government income from municipal taxes, will increase tax payments for pensioners, the unemployed, and welfare recipients. This tax change is expected to directly increase their communal tax bills, making it a substantial financial blow.
Simulations by these organisations suggest that other changes, such as delays in indexation, indexation caps, and the removal of welfare linkages, could result in financial losses amounting to thousands of euros. For example, isolated pensioners receiving a minimum pension could lose €5,091 by January 2030.
The organisations described the proposed reforms as a “step backwards for pensioners, the ill, and the unemployed,” and urged the government to reconsider the measures.
