The Minister of Labor, Yolanda Díaz, defends the need to increase tax collection around , which would fundamentally increase Income Tax (IRPF), the only tax figure capable of providing sufficient income to reach this proposed amount. In 2018, Spain had a 35.4% tax burden, while the EU average was 40.3%, while in the euro area it reached 41.7%.
However, a large number of taxation experts consider that this index is imprecise, not very informative, and of very limited use for making tax policy prescriptions. Thus, while Spain is one of the countries with the lowest tax burden in the entire euro area, the tax effort is among the highest, even above some countries such as Denmark, Sweden, Finland or the Netherlands, a paradigm of high taxes.
According to this index, Spain is only behind Portugal, Italy, Greece and France and far ahead of countries with fully consolidated welfare states. Thus, for example, if the Danish tax burden (45.4%) were applied to Spain, the effort required of Spaniards would be higher: the Danes have a per capita income of 51,600 euros per year, while the Spanish is less than half (24,000 euros).
This difference is explained, fundamentally, because the Spanish tax system is not capable of collecting more money when tax increases occur. The underground economy and the enormous impact on productive activity of an increase in tax pressure explain this distortion. In addition, the tax burden index does not take into account the effort required to generate GDP, since the same tax burden may require very different tax sacrifices, since tax burden and tax effort are different concepts.
For example, the tax burden for all concepts (including Social Security contributions) of the lowest-paid single workers in Spain is only 3.5% less than the European average, when our GDP per capita is 9 Lower % in purchasing power. That same burden in Ireland, for the same worker, is 37% less than the European average while their per capita income is 91% higher. In addition, Ireland had 4.8% of its active population unemployed last February, and Spain had 13.6% unemployment.
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Applied Economics professors José Félix Sanz and Desiderio Romero (Rey Juan Carlos I University) in their report The Unbearable Lightness of the Fiscal Pressure Index, published by Funcas, calculate the Fiscal Effort Index for the twenty main OECD economies and conclude that Spain occupies the fourth country in the table in the Frank Index or the fifth step in the ranking in the Bird Index. Although we are the fifteenth country in fiscal pressure, we are among the five developed economies with the greatest fiscal effort.
Sanz and Romero estimate that among the limitations of this tax pressure index it is worth mentioning that it only informs, and imperfectly, of the level of taxation, but it says nothing about the composition of the tax system that generates the collection or how the burden is distributed. tax among taxpayers.
Therefore, if the economic inequalities between countries are of concern, the tax burden index as a tax indicator is considered to be very deficient, with very different tax sacrifices.
The criticism of the tax pressure index is not its calculation itself, but “the obsessive use that is being given to it, making it the essential, almost unique element on which the current tax reform debate rests. For this reason, both The authors denounce that “even though it is useful, its role is disproportionate. A rigorous analysis of tax systems requires the application of much more elaborate statistical, econometric and mathematical modeling techniques than the simple quotient of two macromagnitudes, such as revenue and GDP”.
“If we want to continue using the tax burden index as a relative measure of collection, it should be accompanied by other aggregate indices that complement and improve the picture of the relative tax burden that taxes pose to society. Among them, the tax sacrifice indices stand out proposed more than half a century ago by Henry Frank and Richard Bird,” the authors estimate. These fiscal sacrifice indices take into account collection and GDP, but also consider population size and per capita income. Thus, the fiscal sacrifice indexes relate the collection to the economic capacity of the taxpayer.
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