Spain tax revenue up 41% since 2018; 2025 starts with ten hikes

Tax revenue rises 41% since 2018 and 2025 opens with ten fiscal hikes

How much has the State's tax bill grown in six years? Between January and November 2024, the Ministry of Finance (Hacienda) collected €273,993 million, compared to €194,705 million in the same period of 2018, Mariano Rajoy’s last full year. That is an increase of €79,288 million, or 41%. And 2025 begins with a dozen tax hikes, according to data handled by THE OBJECTIVE. The paradox is not minor: revenue is at record highs, yet taxes are still rising.

Public spending grows faster than tax revenue

The income figure cannot be understood without the outgoings. State expenditure has risen from approximately €475,000 million in Rajoy’s final term to around €680,000 million currently, according to calculations used in the analysis. That is €200,000 million more per year. Public spending has accumulated growth of over 35% since Pedro Sánchez took office at La Moncloa.

This gap explains why record revenue is insufficient. Public debt has increased by €458,000 million since Sánchez began governing, according to cited data. Some argue the problem is not the level of income, but the commitments acquired. And that the EU has contributed significantly to the rest.

Income tax rises without changing rates

Here is the mechanism that causes the most discomfort and is least explained. By failing to adjust IRPF (personal income tax) brackets for inflation, any worker whose salary rises—even just to compensate for price increases—automatically moves into a higher marginal tax bracket. There is no decree, no announcement, no press conference. The tax burden rises silently.

The circulating calculation is stark: someone earning €25,000 in 2018 should now be paying as if they earned €17,350, had the brackets been updated. Instead, they pay as if they earn more. The cumulative effect over six years turns an invisible hike into a brutal one, hitting lower income brackets hardest, where purchasing power loss is greatest.

How much would you need to earn today to maintain purchasing power?

The answer lies in accumulated inflation. If public spending rose 41% in six years, salaries should have increased by the same percentage to maintain buying power intact. Someone earning €20,000 should now be earning €28,200. Someone earning €30,000, about €42,300. And someone earning €60,000, around €84,600. The compound annual rate of this increase is 5.8%.

Reality is different. Purchasing power has fallen by around 10% in the same period, according to the analysis. Inflation acts as a silent tax: part of the net salary not received and part of the cost of goods and services end up in public coffers. No rate changes are needed to increase the fiscal load.

Civil servants, pensions, and where the money goes

Where the money goes is the other half of the issue. Part of the analysis argues that the additional €80,000 million is spent on expanding public employment—over 400,000 new civil servants since 2018—and sustaining the pension system. Opponents respond that raises for public employees have been minimal and that social spending is an obligation, not a whim.

The core problem is demographic. The combination of more retirees, fewer workers supporting each one, and ever-growing debt paints a scenario some directly call inevitable bankruptcy. Young people, they say, should consider this.

The argument that doesn’t hold: blaming Rajoy for 2025

There is always the recourse of blaming the legacy. Sareb (the Spanish bank restructuring asset management company), the banking bailout, the €50,000 million in public funds that prevented housing prices from falling. It is true those existed. It is also true they were a quarter of what spending has risen in a single year. Attributing the current gap to a decision made a decade ago is, at best, an exercise in accounting nostalgia.

The party is paid for by the same people as always. And no, it is not the rich.