Spain's tax burden still at pre-crisis levels
Despite hikes in both income tax rates and value-added tax, Spain is one of the few wealthy countries in the world to have an lower overall tax burden now than before the economic crisis, a new report from the OECD shows.
While Spanish income tax rates and value-added tax (VAT) rates have climbed since 2012, Spain is one of only three countries in the 34-member OECD where the tax-to-GDP ratio is still below 2007 levels.
The tax burden in Spain in 2013 was 32.6 percent, up from 22.1 percent 12 months earlier.
However. it remained 3 percent lower than pre-crisis levels.
Spain came 21st out of 34 member countries in terms of the tax to GDP ratio in 2012, or the latest year for which data is available for all OECD countries. In that year Spain had a tax to GDP ratio of 32.1 percent compared with the OECD average of 33.7 percent. In 2012, 30 percent of Spain's tax earnings came from tax on income, profits and capital gains while 36 percent derived from social security contributions. Revenue from VAT made up 16.6 percent of all tax earnings in 2012, below the OECD average of 19.5 percent. Spain's VAT rate of 21 percent is above the OECD average of 19.1 percent at the beginning of 2014. It has also soared from 16 percent in 2010. Income rates have climbed across the board as well, although there are regional differences. In 2012, the tax rate for people earning from €17.007 to €33.007 rose two percent to 30 percent. For people earning from €33.007 to €53.407, the tax rate climbed three percent to 40 percent, and for people in the €53.407 to €120.000 bracket, the rate went up four percent to 47 percent. Spain also has the third highest marginal tax rate in Europe at 52 percent, behind only Sweden and Denmark. This rate kicks in with earnings of over €300,000.20 ($414,000), although, again, there are regional differences. However, the government says it plans to cut taxes in 2015, an election year in Spain. This will see the lowest income tax rate on people earning less than €12,450 ($16,900) a year come down from 24.75 percent in 2014 to 20 percent in 2015 and 19 percent in 2016.
The top rate for those earning €60,000 or more a year would be cut from 52 percent in 2014 to 47 percent in 2015 and 45 percent in 2016.
The population would enjoy an average income tax cut of 8.06 percent next year compared to 2014, government figures showed.
The corporate tax rate, meanwhile, would be trimmed from 30 percent to 28 percent next year and 25 percent in 2016.
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While Spanish income tax rates and value-added tax (VAT) rates have climbed since 2012, Spain is one of only three countries in the 34-member OECD where the tax-to-GDP ratio is still below 2007 levels.
The tax burden in Spain in 2013 was 32.6 percent, up from 22.1 percent 12 months earlier.
However. it remained 3 percent lower than pre-crisis levels.
This will see the lowest income tax rate on people earning less than €12,450 ($16,900) a year come down from 24.75 percent in 2014 to 20 percent in 2015 and 19 percent in 2016.
The top rate for those earning €60,000 or more a year would be cut from 52 percent in 2014 to 47 percent in 2015 and 45 percent in 2016.
The population would enjoy an average income tax cut of 8.06 percent next year compared to 2014, government figures showed.
The corporate tax rate, meanwhile, would be trimmed from 30 percent to 28 percent next year and 25 percent in 2016.
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