However, these are not always straightforward, given the difficulties in agreeing how to apply the fairness principle and because economic theory and empirical evidence are not always capable of reaching irrefutable conclusions regarding the effects of the various taxes on economic growth. 31  A first approximation that may be useful is to compare the composition of tax receipts in Spain with their composition in other European countries. In this respect, Spain stands out for its low level of indirect taxation, which includes VAT, excise duties and, as a particular case of the latter, environmental taxes. Specifically, almost half of the difference between total tax revenues in Spain and the arithmetic mean for the euro area, as a percentage of GDP, is explained by the higher proportion of goods and services taxed at the reduced and super-reduced rates of VAT. A very significant part of this gap is also explained by the lower level of environmental taxation, which is primarily the result of low taxation of hydrocarbons. As regards direct taxation, corporate income tax receipts are also low in Spain. In contrast, when taxes on personal income are considered together with social contributions, their contribution to the revenue gap with the euro area is roughly zero. As highlighted by the second phase of the public spending review undertaken by the AIReF, there is considerable scope to reconsider a characteristic feature of the Spanish tax system, namely the particularly high level of tax benefits.
When the SRR was introduced in June 2016, capital flows into the bond market had more or less clogged up the interest rate channel of monetary policy transmission. As a result, the effects surfaced primarily in a higher exchange rate. Because capital controls on outflows had not yet been lifted at that time, the risk existed of an overshooting of the exchange rate, with adverse repercussions for Iceland’s tradable sector. In addition, it was considered unfortunate, and actually unnatural, that large carry trade positions should accumulate before those that had entered the economy before the crash had been released. The exchange rate of the króna was also rising, and rose even further thereafter, because of strong tourism-generated inflows through the current account. This, of course, had a crowding-out effect on other segments of the tradable sector. If this had been compounded by a steep rise in carry trade-related inflows, Iceland would have found itself in a more dangerous position, with increased risk of an abrupt correction later on and the associated impact on economic and financial stability. Because of the recent decline in the exchange rate, this risk has receded, and it could even be argued that the risk is currently in the other direction; i.e., that excessive pessimism and self-fulfilled expectations of a further depreciation in the króna could lead to undershooting.