A recent study conducted by the General Council of Economists of Spain (CGE) and the Registry of Tax Advisory Economists (REAF) reveals that middle-class families in Spain allocate approximately one third of their income to paying taxes. The study examines the tax bill of Spanish households, highlighting that personal income tax is the largest contributor to the tax burden. However, when considering other taxes such as VAT, social contributions, and IBI, the burden of personal income tax more than doubles.

According to the research, middle-class households in Spain bear an average personal income tax rate between 13.76% and 17.23%, depending on various factors such as the number of individuals in the household, the number of income earners, and the presence of dependent children. The progressive nature of personal income tax plays a role in this variation, with singles paying an average rate of almost 16% on an income of €20,798.7, resulting in a tax payment of €3,318.84. This burden increases disproportionately as income levels rise.

The structure of the household also affects the tax rate. For instance, a middle-class couple with a child, where only one adult earns income and they file their tax return jointly, has an average tax rate of 18.04%. However, if both parents work, the individual tax rate for each of them drops to 13.76%. The number of children also influences the average tax rate for upper-middle incomes more significantly than for medium and lower-middle incomes, as those in the latter categories are exempt from paying taxes initially.

In addition to the nuances of personal income tax, each region has specific tax regulations that can alter the tax burden. For example, Catalonia has the highest personal income tax payment for a single taxpayer without children, while the Canary Islands have the lowest payment, with a difference of €338. Madrid and the Canary Islands also have a higher regional tax quota, with the regional share representing approximately 47% due to additional tax relief.

However, personal income tax is not the sole taxation impacting households. Social contributions, VAT, special taxes on goods like alcohol, tobacco, and electricity, as well as IBI (property tax) and taxes on vehicles and garbage also contribute to the overall tax burden. When considering all these taxes together, the total tax burden for families is nearly double the initial personal income tax rates, amounting to an average rate of 31.71% to 35.35%.

Valentín Pich, President of the CGE, emphasizes the significance of understanding the effort required to pay taxes and urges citizens to be aware and attentive to the taxes they face throughout the year. Salvador Marín, Director of the CGE studies service, proposes using personal income tax to offset the tax burden for specific types of families through indirect taxes such as VAT or IBI. However, with Spain’s constant fiscal deficit, significant reforms may be challenging to implement.