BUSINESS

Tax rate burden of large corporate groups eased to 3.5 percent during crisis

Large corporations paid just 3 billion euros tax on combined earnings of 86 billion in 2011

While workers and pensioners have suffered the brunt of the government’s austerity drive to rein in the public deficit with salary cuts, higher taxes and lower spending on healthcare, education and unemployment benefits, the big corporate groups in Spain have had benign treatment from the taxman.

According to official figures from the tax agency, those corporations contributed 12.673 billion euros to the government’s coffers in 2007. Taking advantage of tax reforms that lowered the amount they paid, that figure had fallen to 3.012 billion by 2011 when the then-government of Socialist Prime Minister José Luis Rodríguez Zapatero stepped up efforts to put the financial affairs of the country in order.

The 3.012 billion euros in taxes paid by big companies in 2011 represented only 3.5 percent of their combined earnings for the year of 85.984 billion euros.

The Zapatero government in 2007 reduced the corporate tax rate from 35 to 30 percent and in the case of small-to-medium sized enterprises from 30 percent to 25 percent. The economy minister at the time, Pedro Solbes, said the impact on the government’s finances would be manageable as the tax cuts would improve domestic companies’ competiveness and increase their earnings, in turn swelling the public coffers.

The current government of Prime Minister Mariano Rajoy increased both personal income and corporate taxes and removed tax breaks afforded companies in 2012 as part of its draconian austerity drive.

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