In recent years, Spain has experienced a notable increase in taxes that has significantly impacted its fiscal competitiveness. Since 2019, the tax burden has grown steadily, leading to a drastic drop in international indices that assess the ability of countries to attract investment and foster economic growth. In 2024, Spain ranks 33rd out of a total of 38 countries analyzed, reflecting a worrying loss of competitiveness compared to its peers.
Business organizations and economic agents have been quick to express their concern. They argue that current levels of taxation are “counterproductively high” and warn that there is no margin for further increases without triggering more pronounced negative effects. These effects include stagnant investment, which remains below the levels of four years ago, and an increase in business relocations, a trend that threatens to further weaken the country’s productive fabric.
Is a tax increase feasible?
Experts at the Institute of Economic Studies (IEE) argue that the tax reform demanded by the European Union does not necessarily involve a tax increase. On the contrary, they argue that what the EU is really looking for is to stimulate the potential growth of European economies, something that could be better achieved through a fiscal policy that reduces the tax burden and encourages economic activity. According to specialists, lower taxes can generate multiplier effects in the economy: higher investment, job creation, and a strengthening of domestic consumption.
Moreover, international data reinforces this position. Many OECD countries with more competitive tax structures have managed to attract significant investment and stimulate key sectors of their economies. In contrast, the Spanish case shows that an excessively taxing approach can become an obstacle to business development and innovation, driving capital and opportunities away to more favorable environments.
The impact on investment and employment
One of the most worrying effects of the tax increase in Spain is the slowdown in investment. Since 2019, investment levels in the country have declined, reflecting a loss of investor confidence in the tax and economic environment. This phenomenon has direct repercussions on employment and the creation of new businesses, key elements to ensure sustainable growth in the economy.
On the other hand, the high tax burden is also encouraging the relocation of companies. Many organizations, especially those with the capacity to move their operations to other countries, are opting for more attractive environments in terms of tax costs. This not only implies a loss of tax revenue for the country, but also a deterioration of the business fabric and a reduction in job opportunities for citizens.
The need for strategic change
Given this scenario, it is essential to rethink the country’s fiscal strategy. The objective should not only be to comply with the demands of the European Union, but also to adopt an approach that guarantees long-term economic sustainability. Reducing taxes could be a key tool to regain investor confidence and foster solid and balanced economic growth.
This strategic change would imply not only adjustments in tax rates, but also a comprehensive review of the tax system. It would be necessary to simplify the regulatory framework, reduce the bureaucracy associated with business activity and ensure greater efficiency in the use of public resources. These steps could place Spain in a more competitive position globally, attracting investment and generating growth opportunities for all sectors of the economy.
Conclusion
The loss of fiscal competitiveness in Spain is a critical issue that requires immediate attention. The current fiscal policy, focused on a sustained increase in taxes, has proven to be insufficient to stimulate economic growth and, in many cases, has generated adverse effects. It is time to rethink the approach and adopt measures that promote a more dynamic, innovative and competitive economy. Only in this way will it be possible to reverse the current trend, strengthen the business fabric and ensure a more prosperous future for the country.
