Spain will obtain 95 billion euros more in taxes in 2024 than in the years before the pandemic, reaching 295 billion euros collected, are the data that emerge from the study “Tax competitiveness 2024. A necessary diagnosis of taxation in Spain”, prepared by the Institute of Economic Studies (IEE). These figures represent a tax increase of 28%, while GDP increased by 17%.
The regulatory tax burden stands at 117%, 17 points above the European Union average and 16.3 than the OECD average (100.7%). This is the second worst figure in the last 4 years (the worst being 2023, when it stood at 117.2%). In 2021, it stands at 112.8 points, in 2022 it rises to 116.4 and in 2023 it is positioned at its highest level.
As for The regulatory tax pressure is worrying, said Íñigo Fernández, president of the IEE, who explains that “it must be based on competitiveness and neutrality”.emphasizing that “collection is often used as a political weapon rather than as an instrument to collect in a fair and efficient manner,” Fernández added. This big difference in the figures compared to the EU is also due to the high rate of unemployment and underground economy existing in Spain, since if employment figures similar to those of the EU-27 were reached, we could get around 14.4 billion. euros more, the equivalent of one point of GDP.
This way you will be able to know the direct fiscal effort that Spain makes when it comes to paying taxes. This figure is 117%, or 17 points higher than the European Union average. and 82.2 more than Ireland, the country which makes the least budgetary effort and occupies first position. In this way, Spain’s budgetary pressure, according to the IEE study, should represent 39% of GDP, while that of the EU reaches 41.1%.
Tax competitiveness
Through taxes, the competitiveness of countries can also be measured, because the economic and regulatory environment for businesses is fundamental in the development of the economy. For this there is the tax competitiveness index, in which the tax system is analyzed with various variables to find out if there is a correlation between taxation and economic prosperity. Inside rankingmade up of 38 countries, Spain occupies 33rd position, with 56.3% competitivenessbelow what it was in 2023 (31) and well below what it was in 2020 (27). Thus, in just 4 years, the country has lost 6 positions in terms of budgetary competitiveness.
To try to understand the poor position of Spain, which occupies fourth position from the bottom, we must take into account various indicators that were used to achieve the ranking. Among them, we distinguish regulatory tax pressure, tax effort, business taxation and savings taxation. In each of them, the taxes applicable to them are taken into account and have increased in recent years above the average of the European Union and the Organization for Economic Co-operation and Development (OECD).
Another fundamental variable to know the tax competitiveness of Spain is the tax pressure on companies.
Tax pressure on businesses
After analyzing the pressure and budgetary effort variables, it is essential to know what taxes whose tax rate is higher than that of the EU and which cost businessmen more.
The first of these is the Corporate taxthe rate of which is 25%, compared to 21.3% on average in the EU. To know the tax competitiveness through this tax, we take into account the tax pressure, which is 24.1% higher than the EU average, which remains at 100%, and 15.9% higher than that of the OECD (108.82).
THE Savings and professional taxes They have also suffered increases in recent years. So, the IEE president said that we are not on the right track: “I think we are going in the wrong direction, because we should not focus on increasing taxes, but rather on controlling spending”, referring to the lack of spending. control plans by the Government, since tax collection in 2023 set a record with 271.935 million euros, 6.4% more than in 2022, and it is expected that this 2024 will reach 295 billion.
Finally, another tax which can reach its maximum rate is the Personal incomewhich can reach 54%, while the EU average is 39.6%, or 6.1 points higher.
Again, Spain faces budgetary pressure well above the EU average, with a particular emphasis on what affects businesses and the self-employed. This situation leads to a relocation of investments, because foreign companies do not see Spain as a profitable country to establish their businesses, which directly influences the flight of taxpayers which could increase the country’s public coffers. All these decisions generate competitive disadvantages compared to other countries in the European Union, which have less restrictive tax regulations and, despite this, experience faster growth.
