This week we learned of a report from the Organization for Economic Co-operation and Development (OECD) which shows that Spain is one of the countries where the tax burden has increased the most over the last decade, by more than three percentage points. … almost triple the average developed countries.
And the increase in the weight of taxes on GDP has not been greater in recent years due to the strong dynamism of the Spanish economy, not because tax revenues haven’t soared.
Furthermore, the report highlights that Social security contributions and personal income tax revenues account for around 60% of the tax burden.which leaves little room for another important tax, corporate tax, which in our country represents only 8% of total income, compared to an average of 11.9% in the OECD. In the case of VAT, we are also below average, with 17.6% of the total tax burden, compared to 20.5% in the world’s major economies.
This means that they are taxes on earned income and employment those who support this increase in tax pressure, which makes little sense in a country like ours, which continues to be at the forefront of youth unemployment and where wages, particularly those of young people, remain very low.
Increasing personal income tax collection It is explained, fundamentally, by the impact of inflation, since by not adapting tax rates or increasing personal and family minimums, the State retains an increasingly large share of wages. Does it make sense that the amount of the child deduction is the same today as in 2015? ¿How much more expensive has the basket become?clothes, shoes… over the last decade? Isn’t it really time to update these numbers?And the same thing happens with tax rates. The logic is that if your salary increases in line with inflation and, therefore, you have the same purchasing power, you will not pay a higher percentage of personal income tax. It’s supposed to be a progressive tax. and that the rate increases if you charge more, but measured in purchasing power.
Social security contributions represent a third of the tax burden
Social contributions from workers and employers represent 34.7% of the tax burden, almost ten points more than the average for large economies (25.5%). Personal income tax, for its part, represented 24.4% against an average of 23.7%.
It is very convenient for the government, especially with the legislative paralysis it faces, to have additional revenues without adopting any measures. But the impact on workers’ pockets is deadly.
And the same thing happens withthe increase in social security contributions. The maximum contribution bases have been raised, a special contribution has been created in theory to pay the pensions of baby boomers… and this makes Spain one of the countries where employment bears the greatest tax pressure. Concretely, social security contributions explain 34.7% of the tax burden in our country, compared to 25.5% on average in the OECD.
And the fact that employers have to pay so much tax to hire a worker discourages not only employment, but also high wages. In 2018 The maximum annual contribution base was 45,500 eurostoday they are close to 60,000. This means that we are discouraged from increasing salaries to this level, because if before, from 45,000 euros gross, you did not have to pay more social security, now you have to pay 28%… which has caused the cost of labor to skyrocket for companies with minimal salary increases. Can you imagine what our salaries could look like if social contributions were placed at the level of the OECD average and if personal income tax rates and minimums were updated? Well that.
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