Taxes are borne not only by those who are obliged to pay taxes: for example, company, corporate tax. Its effects go further and transferred to prices and costs. That’s why it seems necessary Drive tax impact analysis using microdataThis is a much more common practice in other countries than in Spain, according to David López Rodríguez, head of the Macrofinancial Analysis and Monetary Policy Unit. Bank of Spain on the money institute blog.
The real question is: “Who pays the taxes?” And the answer seems obvious: those who are legally obliged to do so. For example, workers When are your taxes taxed? fees (IRPF), companies when they have to declare benefits (corporate tax) or consumers when they do their job shopping (VAT). However, the matter is not that simple, because tax increases or decreases create a kind of ‘shock wave’ effect, whereby “sometimes those who are obliged to pay taxes cannot do it.”Transferring some of the tax burden to other agencies“.
Just analyze tax rate The author points out that who actually pays taxes is determined. And he offers some examples. To reduce the impact of a tax increase on its profits on its shareholders, a company may try to “pass it on to consumers”increase prices), to suppliers (reduce payments on your purchases) and even workers (reduce their salaries)”. In short, corporate tax is transferred through price changes. to consumers, costs to suppliers, and wages to workers. and in different degrees and intensities.
Since the economics are not that simple and depend on many factors and variables, the ability of the affected company to pass on some of the tax depends on various factors such as: the level of competition in markets, the wage bargaining power of workers and the degree of international mobility of tax bases.
Studies
The author advocates tax impact analyzes to find out who actually pays taxes. Such studies have proliferated for some time now, thanks to researchers’ access to individual taxpayers’ administrative data. They are rare in Spain, but not in other countries such as the USA and EU countries.
When it comes to corporate profits tax, proof of this United States of America here’s the thing Half of the tax burden due to this tax is transferred to consumers through higher prices 30 percent falls to workers -through lower wages- and only 20% to shareholders -people who receive less dividends-. Inside GermanyOn the other hand, workers would bear half of the burden of these taxes. This translation will be particularly intense. least skilled workerswho are less able to negotiate their salaries.
Analyzes of different countries of the European Union (EU) between 1996 and 2015 on VAT attract attention. The results show the distribution of the tax burden between consumers and companies. Tax rates were different when they rose and fell. Especially, Transfer of VAT increases to (higher) prices was 55%while translating At (low) prices the reductions in this tax reached only 13%.
Inside SpainAccording to the author, tax impact analyzes are “few and dependent on access restrictions to tax microdata that researchers face.” There is an evaluation among the existing studies. Cultural VAT reduction in 2017. After the study, a moderate decrease in final prices was found as a result of this measure. In the opposite direction, VAT reduction on some foods (temporary exemption for eggs, bread or milk, among other staple foods, and reduction from 10% to 5% for oils and pasta) at the beginning of 2023 Would be transferred at a high percentage to lower final prices Products affected by the measure.
Another study analyzes the tax impact of a tax change. documented legal regulations (AJD) is a tribute transferred to the autonomous communities in 2018. This reform meant that banks, not the mortgage holder, became taxable intermediaries. The results of this study show that 80% of the tax was transferred to mortgage holders in the form of higher interest rates and that lower-income individuals suffer from greater transfers.
It should be one of the future goals of economic policy in Spain. Tax reform aimed at strengthening the sustainability of public finances. The author reiterates the need to deepen tax reflection analysis in this context to better understand how tax increases and decreases affect and who really benefits or suffers from them. Therefore, he adds, “it is desirable to promote it decisively.” researchers’ access to tax microdata“. This would be a way to better understand who actually pays taxes in Spain. “This aspect is vital both for the current configuration of the tax system and for its eventual review,” he concludes.