Page 72 - Economic report 2018

In 2018, the rate of fall in lower than in 2017. This amount is equal to
public debt slowed. 37.7% of GDP, one point less than in 2018.
This trend was favoured by the growth in
nominal GDP, making the percentage the
lowest on record since 2009. Moreover, it remains below the 50% limit set by the Law on
Public Finance Sustainability and the debt target set for 2018 (43.3%). Per inhabitant, the per
capita debt (calculated on the estimated population) was 13,559 euros, 2% less than in 2017.
This is the sixth consecutive annual reduction, which can mainly be explained by the increase
in the population.

Under the accrual principle, it is estimated that Andorra’s tax burden increased half
the tax burden increased half a point to 25%, a point, to 25%, a level close to the
close to the historic high of 2016, when it was
25.2% (see box). This trend was the result of a historic high of 2016.
4.7% increase in total tax revenue, higher than
nominal GDP growth (2.5%), a pattern that has recurred in seven of the last nine years.

Box 8.2
THE ANDORRAN TAX BURDEN: TREND, STRUCTURE AND
COMPARISON WITH EUROPE

Since 2010, the Andorran tax burden has seen a fairly indirect tax, despite losing ground in recent years, to
sustained rising trend, partly linked to the gradual reach 44.3% of total accrued revenue. The second
70 introduction of all the direct forms of tax, which largest component is social contributions, comprising
ended in 2015 with the introduction of income tax 38.5% of total revenue in 2018, practically the same
(IRPF). As a result, the tax burden reached a historic as in 2009. The other income relates to direct tax,
high of 25.2% of GDP in 2016. After a certain decline on income and property, comprising 17.3% of total
in 2017, it returned to the threshold of 25% in 2018. revenue, 6.4 points higher than in 2009. So, in relative
So, of the seven GDP points that the tax burden terms, the percentage lost by indirect tax was gained
increased between 2009 and 2018, the increase can by direct tax.
be explained by 2.3 points from direct tax, 2.7 points
from social contributions and the other 2 points from From a European perspective, despite the increase in
indirect tax. recent years, the Andorran tax burden is still much
The Andorran economy: general developments | VIII. The public sector
lower than the 40.1% European average (according
The distribution by tax forms highlights the fact to 2017 data) or the level of our closest European
that the major component of the tax burden is still neighbours: France (48.4%) and Spain (34.5%), a value

STRUCTURE OF THE ANDORRAN TAX BURDEN - As % of GDP

Tax on production and imports Current taxes on income and property Social contributions

Source: Department of Statistics.