Tax increases, if they are not in line with income and/or the reduction of inflation, give rise to grievances, even social unrest. Sometimes festering from politics.
The traditional imposture: the greater the tax reduction, he maintains, the more investment stimulus, the more revenue, the lower the public deficit. Reality denies it. Ronald Reagan skyrocketed deficits and debt. France’s fiscal debacle reflects Emmanuel Macron’s tax reductions, his (initial) supporters, such as the respected Jean Pisani-Ferry, agree.
Some do not recognize this French failure or the simultaneous Spanish miracle. Although it harbors obvious failures in housing and imbalances between salary income and inflation.
And they encourage nonsense. The last thing is that the left-wing government has increased taxes 97 times, alleges the PP. It is based on the Taxometer 2025 (4/2/2025), which among other excesses equates any cadastral review with an increase in seven taxes, criticizes the Treasury. According to this, between 2012 and 2018. Among them, increases of up to seven points in personal income tax rates; increases of up to three points in VAT; and raises of companies so defective that the courts have canceled many of them. We must calmly address the degree of effectiveness of the Montoro reforms.
The number of increases would be an indication of unhealthy tax obsession (tax axes, taxes…), argues anarcho-capitalism, for which there is no good tax except the one that is abolished, without considering the cut (clipping?) of public spending, be it social, infrastructure or essential economic modernization. As long as they are not executed by like-minded people.
But the most relevant thing is not the number of increases, but rather the collection in relation to GDP, which depends as much or more on the performance of the economy (the more it grows, the more it collects) than on tax increases. It is the “fiscal pressure”, where Spain still has a pending issue: getting closer to the European average. Reducing this gap makes it possible to recover the reduced relative public spending and/or balance accounts. In Rajoy’s six-year term (2012-2018) it increased two tenths (the fiscal pressure of the eurozone was reduced from 41.7% of GDP to 41.1%; and the Spanish pressure fell from 36% to 35.2%). In the following year (until 2024) the gap was reduced: collection rose from 35.2% to 37.3%, while in the eurozone it fell from 41.1% to 40.9%: the gap is 3.6 points (Eurostat data). There is still an upward trend, but it is decreasing. And it better be digestible.
Corporate taxation, which was reduced by half after the Great Recession, is igniting controversy and is slowly recovering. The Ibex companies. Great asymmetry with SMEs. Their defenders allege that they have internationalized, contribute abroad, and avoid annoying double taxation. But that does not explain the entire gap with the rest, the debatable exemptions or reliefs weigh (for R&D, job creation…), which are more within their reach. As well as their operations in or from tax havens, which are difficult to quantify.
