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Spain's fiscal pressure is reduced for the first time since Rajoy is President

The proportion of the tax collection on GDP fell by 2016 to 34.1%, four tenths less than the previous year

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Spain's fiscal pressure is reduced for the first time since Rajoy is President

Although government of PP has as a flag lowering of taxes, until last year failed to reduce fiscal pressure since Rajoy occupies Moncloa. During his first years as president he raised all taxes. And although tax relief of 2015 served to alleviate taxpayers ' pockets, tax burden was still heavier than when it arrived. And yet it is insufficient to finance public expenditures.

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  • Spain suffers largest decrease in fiscal pressure in eurozone
  • Spain raises much less than rest of Europe for income tax
  • Fiscal pressure reaches 34.4% and rises twice as much as eurozone
  • Why does Spain raise less taxes than European average?

The fall in Spain's fiscal pressure showing data published yesterday by Eurostat is mostly due to strong economic growth. If GDP grows more than collecting, fiscal pressure decreases. That's what happened last year. This caused tax revenue differential between Spain and eurozone to be triggered again. It already accounts for 7.2 points of GDP. That is to say, that Spain could raise almost 75 billion more if it had average fiscal pressure of euro countries. From Treasury y officially explain that y maintain fiscal pressure at that low level to stimulate economic growth.

To give an idea of level of collection of Spain (34.1% of GDP), re is not as compared with countries of our environment. France, for example, has a collection level equivalent to 47.6% of GDP. Portugal has a fiscal pressure of 36.9%. And Germany of 40.4%.

However, public revenues are substantially lower than European average because ir fiscal structure is inefficient. Income tax, VAT and social contributions explain a great deal of difference. First, high rate of unemployment causes withholding of income tax to fall. Secondly, this tribute, which more resources contributes to tax system, is set in a pleiad of deductions, bonuses and reductions that make it a gruyere cheese.

Ireland, with lowest taxes

The statistic disseminated yesterday by Eurostat reveals that Ireland is European country with less fiscal pressure. The proportion of its revenues in relation to GDP barely reaches 23.8% compared to 41.3% of eurozone average.

Ireland is characterized as one of countries with lowest taxes. Many multinationals have moved ir headquarters yesterday to enjoy tax advantages.

The hole of se tax benefits assumes that public coffers stop entering each year about 50 billion. Something similar happens with social contributions. In addition to unemployed and fewest number of employees, in Spain maximum contribution base is met and in or European countries re is no such limit for higher income.

Finally, tax gap is also explained by VAT. Spain applies reduced rates, taxed at 10% compared to general rate of 21%, to tourist sector. In this way, transport, hotel and hotels enjoy a lower encumbrances. In addition, re are large pockets of fraud in this consumption tax, something that also happens in Mediterranean countries.

That is why both European Commission and International Monetary Fund recommend that Spain reduce portfolio of goods taxed at a reduced rate of 10%. In fact, some experts consider that if all products were at general rate, it could be reduced.


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