The Spanish fiscal transition: Tax reform and inequality in the late twentieth century By Sara TorregrosaHetland, Cham: Palgrave Macmillan, 2021. pp. 238. 29 figs. 18 tables. ISBN 9783030795405. Hbk £89.99
本书研究西班牙1970年代民主转型后的税制改革，发现尽管税收大幅增长，但税制未能实现累进，不平等持续存在，对理解第三波民主国家的财政能力有重要参考价值。
Does democracy lead to more progressive taxes and higher redistribution? Spain is currently the second richest economy among third-wave democracies, so it is a critical case study to test whether democratic latecomers converge with advanced welfare states in fiscal capacity and redistribution. Sara Torregrosa's book analyses the Spanish fiscal reform after its transition to democracy in the mid-1970s. Mixing quantitative and qualitative evidence and bringing insights from economics, sociology, and political science, the book provides a comprehensive and absorbing account of the topic. Its main takeaway is that the fiscal transition fell short because increasing fiscal redistribution became more challenging when Spain was attempting to modernize its system. The book begins by describing the evolution of Spain's fiscal system up to the 1970s. At the end of Franco's dictatorship, the bulk of revenue came from inefficient indirect taxes and social contributions. Direct taxation remained centred on old schedular taxes and the general income tax collected very little. Fiscal revenue was small (19 per cent of GDP versus more than 30 per cent in Western European countries) and regressive. When democracy arrived, support for fiscal reform was widespread. The book describes public opinion drawing from many sources, including surveys, party manifestos, press editorials, and think-tank reports. Most of the population demanded higher spending on healthcare and education and a fairer distribution of the tax burden. Faced with economic crises and incipient deindustrialization, conservative forces sought to shift distributive battles away from the workplace. Building on this consensus, fiscality was thoroughly modernized, including a new Personal Income Tax in 1978 and a Value Added Tax in 1986. In 1990, tax revenue stood at 32.2 per cent of GDP and direct taxes were the main source of revenue. Despite these unquestionable advances, the book does not adhere to a triumphalist vision of the Spanish transition and meticulously uncovers the flaws of the resulting fiscal system, many of which persist to this day. Spain never closed the revenue gap with the EU core, the weight of income, wealth, and inheritance taxes remained comparatively low, and the system failed to become progressive. To prove this claim, Torregrosa uses microdata from household budget surveys from 1973 to 1990, adjusting for income under-reporting and imputing all unrecorded taxes. Effective tax rates increased for all income levels, but they remained higher in the lower deciles (due to consumption taxes) and the rate curve did not become steeper at the top of the distribution (due to the maximum cap on social contributions and the privileged treatment of capital income and wealth). Improvements in inspection, formalization, and third-party reporting increased the coverage of the income tax substantially, but evasion of self-employment and capital income remained high. Why did fiscal reform fall short? The book points in two directions: politics and context. Early on, several parties and pressure groups set their sights on ‘reforming the reform’. Parliamentary proposals were delayed, the financial sector opposed ending bank secrecy, and numerous exemptions and allowances were approved that hollowed tax bases. Additionally, the new electoral system led to the over-representation of rural and conservative areas just when the survival of many political parties was in play. This supports the hypothesis that transitions to democracy are more likely if elites control the process and constrain prospects for future redistribution. Opposition to reform was aided by economic changes. In the post-war era, high growth and limited exposure to external markets allowed richer democracies to raise taxes progressively. After the 1970s, inflation and stagnant growth intensified distributive conflicts, and globalization gave capital owners a credible exit threat. Public finance theory shifted its focus from Keynesian demand management towards tax neutrality and efficiency, advocating supply-side measures and lower taxes to encourage investment. The book describes how both right- and left-of-centre parties embraced these ideas. In short, increasing progressivity was harder for third-wave democracies than for countries during the Golden Age of capitalism. According to social policy literature, egalitarian welfare states do not rely on very progressive taxes: they lean on consumption and payroll taxes and redistribute through higher spending. As Torregrosa shows, Spain increased social spending and redistribution, but this barely compensated for a more unequal market distribution. Inequality was persistent during the first two decades of democracy. Thus, Spain forces us to reconsider the link between tax progressivity and redistribution, or at least to specify the revenue threshold above which this trade-off actually works. Not being able to tax the rich while expanding the welfare state raises different challenges than curbing progressivity once large public budgets have been consolidated. Fiscal shortcomings hurt prospects for long-term redistribution through their effect on other institutions. In the early 1990s, faced with record unemployment levels and high public deficits, the socialist government cut benefits and deepened labour market deregulation. In 1992, 60 per cent of the unemployed received benefits; by 1996, coverage had fallen below 40 per cent. Labour market and welfare state dualization further eroded fiscal revenue and tax morale, making it more difficult to build a comprehensive system. The last chapter of the book explores the similarities (and some relevant differences) with fiscal transitions in Latin America and opens questions for future research. In this regard, Sara Torregrosa's The Spanish Fiscal Transition is an essential reference for anyone interested in the fate of democratic latecomers and dualized welfare states.