IEB Report

Political Economy

Tax fraud

IEB Report 3/2014

If Spain wants to achieve a level of fiscal pressure similar to that of the EU-15 mean, we would have to collect about 75,000 million euros more in tax (recall that personal income tax revenues stand at approximately 82,000 million euros).Drawing on figures reported by Schneider and Buehn (2012), this means that if our shadow economy did not exist (the naïve scenario) – and without there being any need to increase the nominal tax burden, we would reach the same levels of fiscal pressure as those of our EU partners and, therefore, the same ratios of public expenditure to GDP1. Alternatively, with a shadow economy similar in size to that of Austria or Luxembourg (the highly optimistic scenario), we would reach 57% of that level, while achieving a shadow economy similar to that of our nearest partners (the optimistic scenario), we would reach 31%.