1887

OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Restoring Fiscal Sustainability in Spain

Spain’s government has introduced ambitious consolidation measures, which should yield a sizeable improvement in discretionary fiscal efforts. Should budgetary outcomes fall short of targets, the government should stand ready to introduce further measures, as announced. Such measures could include subjecting more goods and services to the standard value added tax rate. They could also be used to fund a reduction in some social security contributions paid by employers. Once sufficient progress towards fiscal consolidation has been achieved, a further reform of the tax system towards more growth-friendly taxes should be contemplated. Spain also faces a dramatic increase in ageing-related public spending, mostly on account of pensions. The pension reform plan is welcome, but further reforms in the pension system will be necessary to contain expenditure growth. Rules on the budget balances for each level of government should be reviewed so as to induce regional governments to run larger budget surpluses when activity exceeds potential.

English

Keywords: fiscal policy, fiscal sustainability, pension reform, discretionary fiscal effort, Spain, taxation, fiscal federalism
JEL: H20: Public Economics / Taxation, Subsidies, and Revenue / Taxation, Subsidies, and Revenue: General; H55: Public Economics / National Government Expenditures and Related Policies / Social Security and Public Pensions; H21: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Efficiency; Optimal Taxation; H77: Public Economics / State and Local Government; Intergovernmental Relations / Intergovernmental Relations; Federalism; Secession; H53: Public Economics / National Government Expenditures and Related Policies / National Government Expenditures and Welfare Programs; H60: Public Economics / National Budget, Deficit, and Debt / National Budget, Deficit, and Debt: General
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error