Population ageing and public finances: Spain’s tax revenue gap by 2040
Fiscal sustainability
Fecha: julio 2026
Desiderio Romero-Jordán
SEFO, Spanish and International Economic & Financial Outlook, V. 15 N.º 4 (July 2026)
Population ageing poses welldocumented risks to public finances through higher spending, but its revenue implications have received comparatively little attention in the Spanish literature. This analysis focuses on the three taxes that together account for around 77% of total tax revenue—personal income tax, social security contributions, and VAT—and estimates their exposure to demographic change through a static simulation that applies projected 2040 household age distributions to 2025 tax data. Personal income tax is the most structurally vulnerable, given its reliance on earned income, which peaks during prime working years before declining after retirement as wages are replaced by pensions. Social security contributions face analogous pressure as the pensioner share grows and the wage share of national income contracts. VAT revenue is affected both because older households spend less overall and because they devote a larger share of consumption to goods subject to reduced rates, such as food, medicines, and assistive devices. Aggregating across all three taxes, the simulation points to a total revenue reduction of around 3.3%, equivalent to approximately 12.9 billion euros, with the burden of revenue generation shifting toward households whose main earner is aged between 60 and 75. Offsetting this shortfall through immigration would require around 650,000 additional households in the 30–39 age bracket, although this estimate is conservative, as immigrant households tend to generate less tax revenue than native households of comparable age.