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Effective rates

The average effective rate on income and spending in 2021 is estimated to be 15.3%, with an increase of 1.8% compared to 2020 ( Table 1.3 ). The estimate is provisional until 2021 is completed with the annual personal income tax and corporate tax returns, which will be known, for the most part, between June and July. With the information available, the average rate recovered the upward trend that followed before 2020 (Graph 1.21) and reached the maximum level it already had in 2014, the year before the last major reform in indirect taxation. It must be remembered that the growing trend is fundamentally a consequence of the continuous growth that occurs in the effective rate on household income. In 2021, this trend was also accentuated by the increase in the effective rate on the base observed in the Corporate Tax. Unlike what happened in 2020, in 2021 regulatory changes were introduced that affected the rates (among others, the increase in rates in the general and personal income tax savings bases for the highest incomes, the limitation on the exemption of income from abroad in the Corporate Tax, the increase in VAT rates for sugary and sweetened beverages and the reduction in VAT rates on domestic electricity consumption and in the Special Tax on Electricity), although its importance in the variation in effective rates was relatively low. Other effects weighed more, as a consequence of the changes that had occurred in the composition of the bases in 2020 (higher unemployment benefits, lower spending on services at reduced VAT rates,...).

In personal income tax, the effective rate rose to 13.2%, 3.2% more than in 2020, a year in which it had practically remained the same as in 2019 ( Table 2.1 ) . The increase had its origin basically in three elements: the regulatory changes with the increase in the rate in the general base and in savings for the highest incomes (2 points in the state rate from 300,000 euros in the first case and 3 points from 200,000 euros in the second) and the modification of the limits on reductions linked to pension plans; the increase in the pension rate (due, above all, to the usual sliding effect towards higher average pensions by new pensioners entering the system); and the loss of importance in 2021 of unemployment benefits, with average rates almost zero, and which in 2020 had lowered the effective rate. The increase in the rate caused by these elements was qualified because throughout the year the contribution to household income from the salaries of SMEs increased, which, with lower average rates, put downward pressure on the effective rate, which contrary to what had happened the previous year.

The effective rate on the corporate tax base was 21.4% in 2021, 4% higher than the estimate for 2020 ( Table 3.1 ). If the rate is calculated on profits, the result is a rate almost the same as the previous year (9.15% compared to 9.17% in 2020). The variation in rates is almost exclusively a consequence of the different growth estimated for bases and rates in the different groups of companies. The only relevant regulatory change with impact (the limitation on foreign income exemptions in article 21 of the law) slightly raised the rate in the group of affected companies, although its importance as a whole is less significant.

The effective VAT rate stood at 15.3%, 0.1% lower than in 2020 and approximately equal to the average of the last six years ( Tables 1.3 and 4.1 ). In 2021 there were significant changes in the tax with the increase in the rate from 10% to 21% for sweetened and sugary drinks, included in the Budgets for 2021, and the reduction from 21% to 10% of the applicable rate, basically, to domestic electricity consumption, in force since the end of June, which were added to measures inherited from RDL 15, 34 and 35 from last year that regulated type 0 in COVID products and vaccines and the super-reduced rate for masks. However, all these changes did not translate into a variation in the aggregate rate. In addition, expenses were recovered with reduced rates (such as those for hotels and restaurants), which were greatly affected by the limitations on activity in 2020, and in the second part of the year there were strong increases in the prices of some products. that go to the general rate (as is the case of fuels).

The average effective rate on Excise Taxes, calculated as the proportion of the tax accrued to the value of consumption, was reduced by 10.6%, falling to its lowest level since 2014. As noted in all reports, this type is included only for the purpose of completing the analysis of bases, types and income, but it is not the type that is applied (in several figures the base is made up of physical consumption and only in two - tobacco and electricity - value matters). Furthermore, in the absence of regulatory changes, this effective rate moves in the opposite direction to the prices of energy products, which determine the value of consumption. In 2019 and 2020 these prices decreased, which led to a growth in the rate, and in 2021 they increased intensely and that led to a sharp decrease in the rate.