Tax burden in Spain (42%) reaches historic highs, according to IEE

MonteroMaría Jesús Montero, Finance Minister

The Instituto de Estudios Económicos (IEE) pointed out on Tuesday that the tax burden in Spain had reached historic highs in 2022, exceeding 42% of GDP and standing above the EU average (41.7%) for 2021 – the last year for which data are available.

“The tax effort, i.e. the tax burden normalised according to income, is already 53% higher than the EU average”, warned the IEE President, Íñigo Fernández de Mesa, at a press conference to present the ‘Tax Competitiveness Index 2022’.

The report also includes the Tax Competitiveness Index prepared by the Tax Foundation in the United States, in which Spain is placed in 34th position out of the 38 countries analysed in 2022, making it one of the five countries with the worst tax competitiveness within the OECD, having fallen nine places from the 23rd position it occupied in 2019.

With the tax burden expected to continue to increase in 2023, the IEE has urged the Government, before any tax reform, to look to neighbouring countries to avoid effects such as relocation of investments, taxpayer flight or putting our residents at a competitive disadvantage.

“The competitiveness of countries is not only based on the good work of their companies and the quality of their products, or on the training of their workers, but also on the economic and regulatory environment, as well as the fiscal framework of the different territories,” the report states.

In the opinion of the CEOE think tank, the increase in tax revenue should be based on increasing the tax base, promoting economic growth and combating tax fraud, rather than on increasing the pressure on taxpayers.

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