He Institute of Economic Studies (IEE) denounced this wednesday that Spain makes a fiscal effort 17.8% higher than that of the European Unionwhile The fiscal pressure will be around 39%. This is what the report shows Tax competitiveness 2023. The tightening of business taxation in Spain slows down economic growth presented this Wednesday by the president of the IEE, Igo Fernndez de Mesa, and its general director, Gregorio Izquierdo.
The report states that, In 2023, the forecast tax revenue will grow by a percentage somewhat higher than GDP, so the fiscal pressure in Spain will be around 39%data that consolidates “the strong increase in fiscal pressure” that has been occurring in recent years, which has reduced the differential with the EU average, which reached 40.2% by 2022, while, in Spain, that year, 37.7% was reached. The IEE stressed that This increase in fiscal pressure has been carried out through the introduction of new taxes or the reform of existing oneswhich affect business taxation and savings and investment and pointed out that the difference with the EU “is not due to the tax pressure on companies and entrepreneurs”, since in Spain there is a “higher level than the EU average.
Specifically, the collection of Corporate Tax represented, in Spain, 2.7% of GDP, and business contributions to Social Security, 9.5% of GDP, which combined represent 12.2% of GDP. For its part, the EU average is 3.3% in Corporate Tax and 7.1% in Social Contributions paid by companies.
In addition, In Spain, business contributions to Social Security represent 25.2% of the total collection, while in the EU the average is 17.7%. For its part, Corporate Tax accounts for 7.2% of the total compared to 8.1% in the EU. In conclusion, our companies contribute 32.4% compared to the 25.8% average in the EU.
FISCAL COMPETITIVENESS
According to him Tax Competitiveness Index (ICF) of the Tax Foundation, Spain in 2023 is among the economies within the OECD with “the worst tax competitiveness and with a strong decline in this indicator in the current legislature.” Last year, Spain ranked, in terms of fiscal competitiveness, in position 31 of the total of the 38 countries analyzed, three positions higher than the previous year, but still eight positions lower than the 23rd position it occupied in 2019.
The IEE indicated that this shows a “notable loss of fiscal competitiveness in our country from the position before the pandemic”, reflecting the effect of tax increases on companies and entrepreneurs, a trend that the Government “seems determined to maintain at the present time.” legislature, with continued tax increases and the maintenance of the new tax figures that were, in principle, designed on a temporary basis.
Based on this index, the IEE has developed the Normative Fiscal Pressure Indicator, regardless of the collection it obtains, and in 2023 said indicator stands at 117.2 points, 17.2% higher than the average of the EU and almost one point higher than the 116.4 points of 2022. The Spain’s situation is also 19.1% higher than the average of OECD countrieswhich has 98.1 points.
TAXES
The CEOE study center pointed out that there are two tax figures that have a “greater regulatory fiscal pressure.” Firstly, corporate tax is among the six most burdensome in the OECD, which presents a regulatory tax pressure that is 28.9% higher than the EU average, and 20.9% higher than the EU average. OECD.And on the other hand, there is the property tax, which is the second highest in the entire OECD, only behind Italy, of the 38 countries analyzed. In this case, Spain’s position is 39.6% higher than that of the EU, and 37.3% higher than the OECD average.
Regarding the Personal Income Tax, it is 6.1% above the EU average and 2.2% above the OECD average. Furthermore, Spain is among the countries where the personal income tax is more progressivespecific, in tenth place out of a total of twenty-eight analyzed. Likewise, the joint effect with Social Security contributions “raises the tax rate, in Spain, to 59.5% in 2022, which means that the net salary that the employee finally receives constitutes 60% of the labor cost “.