Do we really live in a fiscal hell?

BarcelonaFor a few days now, the opposition's offensive has consisted of talking about the existence of a fiscal hell. The PP, which insists on the need to lower taxes, has recently been using the concept frequently. And it is an expression that the president of Foment del Treball, Josep Sánchez Llibre, who will run again for a third term in the elections he has called for May 18, made known during the presentation of the Green Paper on taxation in Catalonia in 2024. He himself considers it "apt" and says it is currently enduring.

Green Paper on taxation in Catalonia in 2024. He himself considers it "apt" and says it is currently enduring.

Comparative macroeconomic data, on the other hand, reveal that there are probably places with more fire and tax boilers. Fiscal pressure in Spain, that is, the portion of the cake that taxes and social security contributions take, represented 37.3% of all wealth generated in the country (GDP) in 2024. The average for the European Union (EU) was 40.4%; that of the euro area, 40.8%. And there are countries where this variable weighs much more than here: 45.3% in France, 40.9% in Germany, or 42.6% in Italy.

It is true that we have some taxes, such as wealth tax, which is hardly implemented in any other country, but it is also true that the main public services, such as education, healthcare, or social services, must be financed in some way. Those who so much demand tax cuts or adapting income tax to inflation (deflating the tariff) – a measure that benefits those who earn more most – do not so much advocate for selective and less costly cuts for public coffers.

And something even more important. They do not propose what to do with the other side of the coin, that is, how to finance public services, a large part of which falls to the autonomous communities, with a financing model that needs to be reformed once and for all. There is still a long way to go here. Public spending as a percentage of GDP was 45.5% in 2024, compared to an EU average of 49.2%, 49.4% in the euro area, 57.3% in France, 49.4% in Germany, or 50.4% in Italy. There is room to both earn and spend more and to align ourselves with the other major community economies. The challenge is to do so more effectively and better.

And those who focus on tax cuts, especially for the highest incomes –like those announced by Donald Trump, the president of a debt-ridden USA–, forget or prefer not to explain how to finance public services, roads, or hospitals. The reason, probably, is that they bet on everyone paying for it out of their own pocket.