Cablegate: Spain's 2003 Tax Burden Rises 0.45 Percent Over

This record is a partial extract of the original cable. The full text of the original cable is not available.

071409Z Jun 05

UNCLAS MADRID 002169

SIPDIS

TREASURY PASS TRACI PHILLIPS

E.O. 12958: N/A
TAGS: ECON EFIN SP
SUBJECT: SPAIN'S 2003 TAX BURDEN RISES 0.45 PERCENT OVER
2003

REF: MADRID 02109

1. Summary. Spain's 2004 tax burden rose slightly to 34.45
percent of GDP, a 0.45 percent rise over 2003. This figure
is calculated using the new GDP base year of 2000, and would
be 36.12 percent of GDP under the older calculation year of
1995 (reftel). The Socialist government promised that the
tax burden would not rise during its term in office. The
government's calculations show that the increase was due to
higher taxes at the autonomous regional and municipal
government level, rather than at the national level. Spain's
tax burden is 16th among the EU-25 and 14th among the EU-15.
End Summary.

2. The Ministry of Economy and Finance published June 6 the
calculations for the 2004 tax burden as a percentage of GDP.
The overall tax burden in Spain rose 0.45 to 34.45 of GDP
over 2003 under the new base year of 2000 used to determine
GDP in Spain. Under the older 1995 base year, the tax burden
would have absorbed 36.12 percent of GDP. Spain's 2004 GDP
was EUR 837.57 million (USD 1.02 billion) and the tax burden
equaled EUR 288.54 million (USD 354.4 million).

3. The Socialist government promised that the tax burden in
Spain would not increase during its term in office. The
Ministry of Economy and Finance argues that the increase in
the tax burden occurred at the regional and municipal
government levels, rather than the central government level.
The calculations show that central government tax collections
actually fell 0.26 percent, whereas regional government
revenues rose 0.55 percent and municipal tax receipts rose
0.14 percent.

4. Even with the small 0.45 percent increase in 2004, Spain's
tax burden is one of the lowest in the EU. Spain held the
sixteenth position in 2003 EU-25 tax burden figures, under
the older 1995 base year. Spain was immediately below the
United Kingdom, and had a tax burden lower than all of the
EU-15 members save Ireland.

5. Spain's government debt is now calculated at 38.4 percent
of GDP under the 2000 base year (40.3 percent under the 1995
base year calculation).

MANZANARES

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