The Spaniards, immersed in the midst of the economic crisis and with skyrocketing inflation, They pay on average 551,185 million euros between taxes and contributions. To these are added the income of public administrations. These data, provided by the General Intervention of the State Administration (IGAE), represent a record figure in terms of tax payments as a percentage of GDP. A widespread problem that affects all of Europe, since with the aging of the population the tax burden will increase on citizens.
You just have to see how in 2023, Spanish taxpayers supported an average rate of 15.4% on major taxestwo tenths more than in an exercise. The year closed with a public deficit of 3.64%. If customs tariffs and bank contributions to the European guarantee fund are added to the national fiscal pressure, Spanish GDP would increase by up to three tenths.
In the second quarter of 2024, The Spanish economy grew again by 0.8% quarter-on-quartera dynamic growth rate higher than the 0.2% registered in the Eurozone. Furthermore, according to new estimates from the INE, between 2019 and 2024, Spanish GDP has grown by 5.7%that is, 1.0 pp above the previous estimate. In 2023 alone, GDP grew by 2.7%, instead of 2.5%, as estimated.
If despite inflation, the stagnation of the German economy or high interest rates, The Spanish economy has maintained its dynamic growth rate It is thanks to the momentum and performance of the labor market and international tourism data. Thus, investment was 0.4% above GDP in the second quarter and private consumption was 1.4%.
Excessive tax burden: a widespread problem
The problem not only affects Spain, but all countries in the euro zonewhich record record numbers never seen before. In fact, in almost all the large economies of the old continent the percentage of GDP has increased. Germany reaching 40%, France and Denmark close to 50%, the United Kingdom in an unprecedented rise of up to almost 40% and countries such as Italy, Finland, Greece or Norway consolidated above 40%.
The thing about “the UK’s tax burden is now at a record high”, is that this is also true for almost all countries pic.twitter.com/Is40bLZOdt
— John Burn-Murdoch (@jburnmurdoch) October 30, 2024
Despite GDP growth, Spain is one of the developed countries in which the percentage is lowest, although with a very pronounced rise. The Government of Sánchez assures that since his arrival the majority of taxpayers have seen their taxation improve.
Spain in record GDP figures
But the numbers show just the opposite, that The weight of taxes on the national GDP has increased by six points since 1995going from 32% to 38%. Specifically, 60% of the increase in fiscal pressure has occurred during Sánchez’s mandate.
The reality is that the socialist Government has achieved the highest collection record in tax history and that, despite the existing fiscal margin with its European counterparts, Spain has been the country with the largest increase in fiscal pressure between 2019 and 2022 among all EU partners. These data, collected in the ‘Taxometer 2024’ of the Juan de Mairena Institute, reflect that families pay two out of every three euros of increased tax collection. We are talking about an amount equivalent to 3,890 euros per household.
Only between 2018 and 2024, The Government has created or raised a tax every monththat is, 69 tax increases. Furthermore, in 2025, it is expected to increase collection by around 7,000 million, that is, 371 euros more per household.
The problem of population aging
One of the serious problems facing Spain, and Europe in general, is the aging of the population, which in addition to putting pension systems or the replacement of professionals in the labor market in check, adds extra pressure to public debt. And it is that, The aging of the population will cost the EU 2% of its GDPat least until 2052.
In these countries, fiscal adjustment in the non-aging-related budget would have to continue after the initial adjustment period of four to seven years, forcing redesign their strategies to place debt at levels below 60% and GDP below 3%.
There are exceptions. Italy, France, Sweden, Finland, Lithuania, Bulgaria and Croatia are the only EU countries that are spared from experiencing an increase in aging spending.
Spain should work on reallocating item expenses and new tax increases. It is recommended cut non-aging budget items by 4% to 5%.
The trend could extend beyond 2031. To offset the balance, policies such as increasing immigration, increasing fertility levels, boosting productivity or reducing the cost of long-term care for the elderly would take on a significant weight and would help cut the tax burden by half a point. But the reality is that, as the active population decreases, there is a decrease in GDP and an increase in the debt ratio. Added to this is the increase in public spending on the elderly and the reduction of investments, which would put downward pressure on interest rates.
Source: www.elblogsalmon.com
