'Spain last among OECD countries in tax competitiveness'

Spain ranks last in tax competitiveness among Organization for Economic Cooperation and Development (OECD) countries. According to the International Tax Competitiveness Index (ITCI) 2023, compiled by the US tax policy center Tax Foundation, Spain ranks 31st out of 38 countries analyzed. If only OECD European countries are considered, Spain is the sixth least tax-competitive country, behind only Italy, France, Portugal, Poland and Iceland.

Estonia is the leader in tax competitiveness

An analysis shows that Estonia has been ranked first in tax competitiveness among the countries' for ten years in a row. 'OECD. According to Tax Foundation experts, this is primarily due to the fact that Estonia has a corporate income tax rate of 20%, which applies only to distributed profits. In addition, this Baltic country has a flat personal income tax of 20%, which does not apply to personal dividends. In addition, Estonia's property tax is only levied on land value, not on the value of real estate or capital. Finally, Estonia has a tax system that exempts income earned in foreign countries 100% from corporate income taxes, with minor restrictions.

Other leaders in tax competitiveness

Although Estonia's tax system is the most''competitive among OECD countries, the tax systems of other leading countries score highly due to 'excellence' in one or more of the main tax categories (corporate taxes, personal income taxes, consumption taxes, real estate taxes and foreign income treatment). For example, Spain ranks 33rd for corporate taxes, 17th for personal income taxes, 19th for consumption taxes, and 37th for real estate taxes.

Estonia is followed in the ranking by another Baltic republic, Latvia, which recently adopted Estonia's corporate tax system and also has a relatively efficient labor income tax system.

Countries with the least competitive tax system

On the other hand, Colombia has the least competitive tax system, as it has a net wealth tax, a financial transactions tax, and the highest corporate income tax rate of 35%. The report emphasizes that "Colombia's VAT covers less than 40% of final consumption, indicating gaps in both policy and application." The second least competitive country is Italy as, according to the report, it has "multiple distortionary property taxes" with separate taxes on real estate transfers, inheritance and financial transactions, as well as a tax''value. In addition, the five lowest-ranked countries have unusually high corporate income tax rates, ranging from 25.8% to 35%. Of these, the four lowest-ranked countries have very high income tax thresholds, ranging from 13 to 21 times average income.

Spain and its tax model

The latest Tax Competitiveness Report from the Institute for Economic Research indicates that over the past five years, the Spanish government has taken 54 measures to increase collections from taxes and social contributions. "The increase in tax revenues has been so significant that if we compare 2017 with the tax revenue forecast for 2022, we can see an increase of 50,121 million euros flowing into the public''Treasury. Despite this, Spain still has the highest primary deficit in the European Union, as spending growth is even more intense," the text says. The Institute for Economic Research warns that Spain has an increasingly less competitive tax model and its assessment is particularly negative in two key aspects for growth: company taxation and taxes on property, inheritance, assets or corporate assets. "Also unsatisfactory is our performance of the personal tax model, with an increasingly low ranking of personal income tax in the ranking. VAT has an average level of tax competitiveness, as does international income treatment, but tax collection measures taken in recent years have also''are affecting our position in both categories,' the report states." The EEI concludes that "when you compare real GDP growth between 2018 and 2023, which is only 1%, with the significant increase in government revenues, whose share of economic output increases by more than 4 points, it is clear that there is a serious problem related to the fiscal pressures that taxpayers are actually experiencing." And it adds: "It should not be forgotten that when the impact of unemployment and the shadow economy is taken into account, Spain has a higher tax pressure than the OECD and European Union average, and that this tax pressure is constantly increasing." To improve our tax competitiveness, the IEI calls for "reforming the tax model in''in line with international best practices'.