The worker’s lower social contribution explains 75% of the difference with the Eurozone
MADRID, 16 Nov. (EUROPA PRESS) –
The fiscal pressure in Spain increased 2.9 points since the arrival of the pandemic until 2022, standing at 38.3% of GDP, compared to the increase of two tenths, on a weighted average, registered in the European Union in this period and the increase of five tenths experienced in the euro zone, up to 41.2% and 41.9%, respectively.
This is reflected in a work on ‘fiscal pressure in Spain and in the EU’, prepared by the Foundation for Applied Economics Studies (Fedea), from which it is concluded that, despite this greater increase, the tax pressure in Spain is still lower to the Eurozone average by 3.6 points of GDP.
The increase in fiscal pressure in Spain from 35.4% to 38.3% of GDP is based largely on income taxation (1.9% of GDP) and within this, on personal taxes (1 .25% of GDP), above all, a consequence of the non-updating of the rate and personal deductions in personal income tax.
The study also points out that taxes on consumption have also contributed to the growth of revenue (0.5% of GDP), although to a lesser extent than those on income; as well as social contributions (0.5% of GDP) concentrated in the employer’s social contribution (0.5% of GDP).
This evolution has reduced the tax pressure differential in Spain with respect to the (weighted) average of the European Union to -2.9 points of GDP and -3.6 points with the euro zone. The fiscal pressure in Spain, however, is higher than the average of the EU and the euro zone using the arithmetic average (1 and 0.4% of GDP, respectively), the Foundation warns.
The analysis of the difference by types of income shows that three quarters of the lower fiscal pressure compared to the euro zone average is located in the worker’s social contribution (-2.7 points of GDP).
It is followed at a considerable distance by that which revolves around consumption (-1 point of GDP), a third of which is in VAT (-0.3 points of GDP), and that of income taxes (1 point of GDP), with greater weight in the tax on corporate profits (0.6 points of GDP). The employer’s social contribution, however, collects considerably more than the Eurozone average (1.8 points of GDP).
As Fedea has suggested, to achieve a distribution of fiscal pressure equal to that of euro countries, it would be necessary to increase taxation on income and consumption, but, above all, increase the social contribution of the worker by reducing his net salary by a 7.3%.
“The distribution of differences by types of taxes and social contributions shows a quite peculiar structure of the Spanish tax system,” the Foundation has warned.
This situation would improve if the recommendations of the last Committee of experts on this matter are applied, with the aim of expanding the tax bases to increase revenue, helping to improve the growth of the Spanish economy.
