Businessmen are accumulating arguments to ask for a reduction in tax pressure in Spain, which they consider degrades confidence, slows down investment and ultimately slows down economic growth. The Institute of Economic Studies (IEE), the think tank of the CEOE employers’ association, has denounced the increase in tax pressure in Spain in 2023, so that it stands at 39%, according to the data provided in the report on “ Fiscal competitiveness 2023. The tightening of business taxation in Spain slows down economic growth.”
One of the elements that the CEOE think tank denounces is that companies contribute a third of the tax revenue, which represents a “notable” loss of competitiveness, and warns in the immediate future of the negative impact that a tax increase would have. to control the deficit this year. Specifically, one third of the total tax collection appears when adding Social Security contributions, which represent 25.2% of the total collection, with the Corporate Tax, which represents 7.2% of the total. In this way, Spanish companies contribute 32.4% to the collection while the EU average is 25.8%.
“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 in the current legislature, with continued tax increases. taxes and the maintenance of the new tax figures that were, in principle, designed on a temporary basis,” warns the IEE report. It is a reference to taxes on banking and energy companies, improvised to face the pandemic crisis and which the Government is going to transform into permanent ones with some modifications.
In its analysis, the IEE focuses especially on two tax figures, the one that has greater regulatory tax pressure. On the one hand, corporate taxation, with corporate tax, with a pressure 28.9% higher than the EU average, and on the other, property taxation, the second highest in the OECD, only behind from Italy.
Regarding personal income tax, it is 6.1% above the European Union average and is one of the most progressive. From here, adding personal income tax with social contributions, the tax wedge rises to 59.5% in 2022. That is, the net salary that the employee finally receives represents 60% of the labor cost.
To this description of the present, the CEOE think tank adds a fear of the future, a potential tax increase to correct the deficit, which, if it occurs, “will worsen our fiscal competitiveness even more,” with the risks of “ relocation of investments, flight of taxpayers and competitive disadvantages for our residents.” He further adds that it would degrade confidence and slow down investments.
