Tax redistribution models in the European Union: Where does Spain stand?

Abstract

The purpose of this paper is to identify the problems that explain the limited capacity of the Spanish tax system to correct income inequality, with special attention to elements such as revenue sufficiency, progressivity, the weight of direct and indirect taxation, and the tax design of the main figures levied on households. The analysis is based on the identification of tax redistribution models within the EU-28, both for the system as a whole and for the main components of the tax mix. Special attention is paid to the unequal role played by indirect taxation, which is not usually considered in comparative analyses. It concludes that Spain's position in relation to other European Union countries in terms of fiscal redistribution seems to be explained, above all, by the smaller size of its direct taxation. Finally, the paper offers some reflections on possible reforms to strengthen the redistributive capacity of the tax system and its contribution of resources to the financing of public spending.

Keywords:

redistribution, progressivity, direct taxation, indirect taxation, tax mix

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