The OECD, in its report Taxing Wages – in Spain, publishes the level of labor taxes (tax wages) paid in Spain in comparison to the OECD and other countries of the said organization.
The indicator used is the weighting of labor taxes paid on the employee’s total labor costs (gross pay) for the company (income taxes and Social Security contributions, both on the worker’s behalf and by the company on the employee’s behalf, exempting social benefits). plus Social Security).
This ratio has increased from 3 tenths in Spain to 39.3% in 2021, when it was 39% in the case of single workers in 2020.
In the OECD average, this ratio is 34.6% in 2021, a six-hundredth lower than in 2020.
As such, this effort to pay labor taxes on wages is about 5 points (4.7 points) higher than the OECD average in Spain.
And this big effort, moreover, has increased in Spain, as in the OECD it falls to a minimum, and remains at 34.6%, in Spain it rises from 39% to 39.3%.
In addition, between 2000 and 2021, the tax wage for single workers in Spain increased by 7 tenths, while it fell 1.6 points in the OECD.
Thus, Spain is one of 24 countries (led by Finland and the United States) in which it originates; In the other 12 (such as Australia or Greece), it drops, and remains at 2.
Additionally, the percentage of personal income tax and Social Security paid by the company on behalf of the employee is 88% in Spain, compared to 77% of the OECD average. This is because companies contribute 23% of total labor costs, compared to the OECD average of 13.5%.
For a couple in which only one of the two works, with two children, Spain ranks eighth in the tax wedge, that is, the eighth highest percentage of labor taxes paid on labor income. Thus, 33.8% are paid in Spain compared to 24.6% of the OECD average, i.e. 9.2 points higher than the OECD.
Therefore, it destroys the government’s mantra that few taxes are paid in Spain, as it is one of the countries where the highest percentage of salaries go to paying taxes and contributions.
For this reason, it is necessary to emphasize the legitimacy of fiscal effort to measure tax burdens to citizens, as opposed to the misleading index of fiscal pressure, which does not reflect that effort well.
The difference with respect to the OECD in the burden of social security contributions on the part of workers, which it bears to companies, is a real disincentive to hiring, making it more expensive, and one of the reasons for the difficulties in construction in Spain. Is. more employment. Additionally, it encourages something harmful, such as the underground economy.
Therefore, the government should discard its erroneous idea of raising taxes and reducing them as much as possible, especially direct taxes, as high direct taxes are the ones that distort the economy the most. However, President Sánchez is embroiled in democracy and refuses to reduce taxes, without abandoning his project to raise them. This will harm Spain’s economy, its activities and job creation.
Or intensive reforms are carried out immediately – energy, pensions, the public sector, for example – spending is reduced – its inefficiency is eliminated – and taxes are reduced – at least, to compensate for the increase in inflation. , even more so, to revive the economy – or we could create a very worrying situation for the Spanish economy, which leaves us in a worse position in the medium term than in 1996 and 2011.
- Jose Maria Rotellar He is a professor at the University of Francisco de Vittoria.
OECD shows that employment in Spain pays very high taxes