Impact of changes in Spain’s VAT rates during the economic crisis: A comparative analysis
Fecha: julio 2013
Desiderio Romero-Jordán, José Félix Sanz-Sanz
IVA, Tipos de gravamen
The VAT reforms in 2010 and 2012 raised Spain’s reduced and standard rates by 3 and 5 percentage points, respectively. Although these measures are in line with trends elsewhere in the European Union, they put Spain in the group of EU-27 countries (along with Hungary, Romania, Latvia, the Czech Republic and Estonia) in which VAT rates have risen furthest during the economic crisis. One of the direct consequences for Spain is that it has gone from having one of the lowest standard rates in the EU (along with Luxembourg) to now having a rate that is near the average. The tax rates applicable to certain representative items in households’ shopping baskets (such as food, books, or medicines) are nevertheless lower in Spain than in its peers. However, this is not so in the case of other items which have a significant weight in the Spanish economy, such as the hotel and catering industry, where the rates are similar to those in neighbouring countries. In this context, the review of some of the goods subject to lower rates is an option to consider, although this would not solve the problem of a low VAT collection ratio and could make the tax regressive.