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Supplemental Material, sj-pdf-1-esp-10.1177_09589287221088174 for Moving towards fairer regional minimum income schemes in Spain by Adrián Hernández, Fidel Picos and Sara Riscado in Journal of European Social Policy

Families with children receive support from the tax-benefit system to a different extent across countries. In Spain, child poverty remains high as compared to other EU countries, possibly pointing to a weaker role of the public sector in providing income support to families with children. In this paper we provide an in-depth assessment of the income support to families with children in Spain. We distinguish between three different forms of income support: (1) benefits aimed to ease the cost of raising children (child-related benefits); (2) supplements to other benefits due to having children (non-child-related benefits); and (3) tax reliefs (allowances and/or tax credits) reducing the tax burden of families with children (child-related tax reliefs). To measure these three dimensions, we use EUROMOD, the tax-benefit microsimulation model for the EU. We follow a similar methodological approach to Corak et al. (2005) and Figari et al. (2011), consisting in building a counterfactual scenario as if there were no children. For assessing the redistributive impact, we adapt the decomposition methodology of Onrubia et al. (2014), based in turn on Kakwani (1999). Our results suggest that the level of income support to families with children in Spain is low and mainly concentrated on tax reliefs, which are regressive in absolute terms. Nevertheless, the total income support to families with children is redistributive in relative terms, this effect being mainly dominated by the extent of supplements in unemployment and social assistance benefits due to having children. Child income support also reduces poverty intensity and incidence, although not to a large extent.

Minimum income schemes are set to provide citizens with a minimum living standard. In Spain, these schemes consist of a heterogeneous and complex collection of regional benefits designed and implemented by the Autonomous Communities. This generates important regional discrepancies among the poorest individuals, undermining equal access, adequate social assistance and ultimately the fairness of these last resort safety nets. Following the recent initiative by the central government to introduce a national minimum income scheme complementing the regional ones, a better understanding of the performance of the existing regional minimum income schemes, in terms of their coverage and adequacy, is of the essence. We assess the budgetary, distributional and poverty effects of the current Spanish regional minimum income schemes, as well as the impact of increasing both coverage rates and adequacy levels. Using the European microsimulation model EUROMOD together with microdata from the European Union Statistics on Income and Living Conditions, we simulate a sequence of theoretical scenarios with different combinations of coverage and adequacy levels using national and regional poverty lines as references. Our results suggest that increasing adequacy would have a higher impact on poverty rates than increasing coverage, but would be less effective to reduce poverty intensity. Importantly, all scenarios imply significant expenditure increases, the more so for larger decreases in poverty intensity, as would be expected. Noticeably, results greatly differ among regions, and are sensitive to measuring poverty under a national or a regional criterion, reflecting Spanish regional disparities in terms of poverty.

The authors analyze to what extent and how the tax burden should be shifted towards top income earners in order to reduce income inequality. Starting from Lambert and Aronson (Inequality decomposition analysis and the Gini coefficient revisited 1993) and Alvaredo (A note on the relationship between top income shares and the Gini coefficient 2011) decomposition by income groups, they prove that for three types of revenue-neutral linear personal income tax reforms based on Pfähler (1984) the redistributive effect is always higher than before the reform; and when the size of the rich group is sufficiently small (e.g. 1%), the best option is allocating tax changes proportionally to net income, and the worst doing it proportionally to tax liabilities. An empirical illustration of the theoretical results is provided using micro data from the Spanish PIT.

The 2010 Economic Adjustment Programme initiated a period of strict international supervision with respect to tax policy in Greece. The country implemented a large-scale fiscal consolidation package, aiming to reduce its public deficit below 3% of GDP by 2016. Since the beginning of the crisis, the provisions of the 'Greek Programme' have been revised several times, and personal income tax reform has figured prominently on almost each of the revision agendas. This paper aims to provide an assessment of the effects of the four major structural reforms that took place in Greece during and in the aftermath of the economic crisis; using microsimulation techniques, we simulate the (ceteris paribus) first-order impact of these reforms on the distribution of incomes, the state budget and work incentives, while also trying to identify the main gainers and losers of these policy changes. Our results suggest that all reforms had a revenue-increasing rationale, with the one of 2011 being designed to have the largest fiscal gains. The latter also strengthened redistribution and achieved the highest decrease in income inequality. The 2013 reform went to the opposite direction by reducing both the redistributive strength and the progressive nature of the Greek tax system. The striking discrepancies in the ways in which different household categories have been affected by the four reforms call for a deeper investigation of the possibility of moving towards more uniform personal income tax rules.

In the European context where fiscal consolidation is required in many countries, tax non-compliance behaviour becomes a very relevant issue for governments and policy makers. In this paper, we aim at contributing to the assessment of tax non-compliance, by estimating individual measures of tax evasion, focusing on employment earnings for two countries, Denmark and Estonia. Additionally, we simulate two different scenarios - a "true world" where some individuals underreport their income to the tax authorities and a "perfect world" where everyone reports truthfully their incomes - in the European microsimulation model EUROMOD, allowing us to obtain the fiscal and distributional effects of taking into account evaded employment income. Furthermore, the Estonian country case allows us to illustrate the importance of linking survey and administrative data not only to accurately estimate tax evasion, but also to correct survey income amounts for measurement error. Preliminary findings indicate that taking into account non-reported incomes has non-negligible fiscal and distributional effects when these are taken into account to compute tax liabilities and benefits, even in a country where estimated non-reported income represent a low percentage of earnings, such as Denmark.

During the last decade, research on income inequality has paid special attention to top income earners. At the same time, top marginal tax rates on upper income earners have declined sharply in many OECD countries. Discussions are still open on the relationship between the increase of the income share of the richest and to what extent the tax burden should be shifted towards top income earners. In this paper we analyse these questions by building and computing a theoretical framework using the decomposition by income groups proposed by Lambert and Aronson (1993) and Alvaredo (2011). We show that for three types of revenue-neutral reforms based on Pfähler (1984) the redistributive effect is always higher than before the reform. When the size of the rich group is sufficiently small we also find that the best option is allocating tax changes proportionally to net income, and the worst doing it proportionally to tax liabilities.

In the aftermath of the financial and sovereign debt crisis, the need for a better understanding of the fiscal and equity implications of national tax policy reforms is greater than ever. National fiscal policies have a significant share in paving the way for economic recovery, fiscal consolidation and reducing looming inequality problems. The present work sets out a consistent framework for the in-depth country analyses of tax reforms using EUROMOD performed by the European Commission services in the context of the European Semester. Three examples of policy analysis are presented with the focus being on the provision of correct inferences alongside the typically analysed estimates and indicators.

This paper analyses the foundations, possible applications and the effects of tourism taxation in Spain. The article begins with an analysis of the economic and environmental reasons for taxing tourism, which would seem to call for taxes based on the principle of benefit, for either revenue or corrective purposes. Subsequently, we describe the praxis of tourism taxation in Spain, with special mention being given to the now repealed Balearic ecotasa. Finally, the effects of two fiscal modifications with revenue or corrective objectives are studied through the use of an applied general equilibrium model developed for the Spanish economy. We thus see that a 10% tax on lodging brings in significant public receipts, increases social welfare and has no effect on the environment. On the other hand, an increase of VAT rates on tourism-related sectors could have the same effects on tourist expenditure but at the costs of greater impact for Spain’s economy.

This paper analyses the foundations, possible applications and the effects of tourism taxation in Spain. The article begins with an analysis of the economic and environmental reasons for taxing tourism, which would seem to call for taxes based on the principle of benefit, for either revenue or corrective purposes. Subsequently, we describe the praxis of tourism taxation in Spain, with special mention being given to the now repealed Balearic ecotasa. Finally, the effects of two fiscal modifications with revenue or corrective objectives are studied through the use of an applied general equilibrium model developed for the Spanish economy. We thus see that a 10% tax on lodging brings in significant public receipts, increases social welfare and has no effect on the environment. On the other hand, an increase of VAT rates on tourism-related sectors could have the same effects on tourist expenditure but at the costs of greater impact for Spain's economy.