PS calls for a “fairer distribution” of taxes in Andorra

The president of the Social Democratic parliamentary group, Susanna Vela, has argued that Andorra can maintain a low and competitive tax system, but has called for a review of how the tax burden is distributed among taxpayers.

The PS’s position is based on 2024 tax data provided by the Government following an information request. According to the Social Democrats, the figures show that two people with a similar economic capacity can end up bearing a different tax burden depending on the source of their income, whether it comes from employment, business activity or certain investments.

“The question we have to ask ourselves is very simple: is it reasonable that working, starting a business or creating economic activity can involve proportionally greater tax effort than obtaining certain forms of capital income?” Vela asked.

The top 10% of earners account for a significant share of personal income tax

The Social Democratic parliamentary group highlights that the data show a high concentration of personal income tax (IRPF) revenue. The top 10% of taxpayers by income account for a significant share of the total revenue collected through this tax.

At the same time, the PS points out that different sources of income are not necessarily taxed in the same way. According to the party, while salaries, professionals, self-employed workers and many small and medium-sized companies are directly taxed on the income and profits they generate, certain capital income and wealth structures may benefit from exemptions, deductions or special tax regimes.

The Social Democrats acknowledge that these mechanisms may have legitimate justifications, such as avoiding double taxation or encouraging certain activities, but argue that it is necessary to analyse how much public revenue is forgone and who benefits from these tax advantages.

“When we decide that a particular form of income should be taxed less or not taxed at all, we are also deciding how the burden is distributed among the rest of taxpayers,” Vela said.

The PS rejects the idea of a general tax increase

The Social Democratic group insists that its proposal does not involve a general increase in taxes or challenge Andorra’s position as a competitive low-tax jurisdiction.

The party nevertheless advocates reviewing the impact of the main deductions, exemptions and special regimes, as well as obtaining more information on how much each type of income ultimately pays in tax.

“The debate should not simply be about whether we pay a lot or a little tax in Andorra. The question is whether, within a low-tax model, everyone contributes in a balanced way according to their economic capacity,” said the Social Democratic group’s president.

Vela summed up the party’s position by stating that “Andorra can continue to have a low and competitive tax system. But low taxation should not mean unequal taxation”, while arguing that the objective is not necessarily to pay more, but to distribute the tax burden more evenly.