Andorran Family Business Group Warns Surging Public Spending Threatens Tax Edge

The Andorran Family Business Association (EFA) has raised alarms over surging public spending, now at around 39% of GDP, warning it risks eroding the country's tax advantages over neighbours Spain and France.

In a briefing, EFA officials highlighted how public expenditure has outpaced GDP growth over the past three years. They contrasted Andorra's position with Spain's 45.5% of GDP in 2024 and France's 57.3%, one of Europe's highest. President Daniel Aristot stressed preserving the fiscal gap, noting tax pressure in Andorra has risen by about 10 points since 2010. "One of Andorra's great strengths is its significant tax difference with neighbouring countries; we have no interest in it rising," he remarked.

The group cautioned against drifting toward models seen in larger European states, where heavier state involvement has squeezed lower tax regimes. Previous EFA analyses had pegged Andorra at roughly 36% of GDP, below Spain's over 40% and France's above 50%, linking lighter state burdens to competitive tax rates.

While acknowledging government debt-reduction steps, EFA advocated benchmarking against peers like Monaco, with no public debt, and Luxembourg at 27%, rather than debt-laden France or Spain. Aristot called zero debt an independence goal.

EFA leaders also pushed economic diversification, protection for retail—Andorra's traditional mainstay—and infrastructure improvements like better external links. They proposed cutting red tape via digital tools and AI, appointing a Trade Commissioner for retail renewal, and extending State Pact measures to tackle housing shortages.

Vice President Paula Tarrado and Director Joan Tomàs attended alongside Aristot. The association lauded ongoing growth and zero unemployment but urged bold reforms before elections, arguing rising taxes could deter investment and businesses. France's 2024 tax pressure reached 43.5% of GDP, underscoring the stakes.