Tuesday, October 3, 2023

Moderation of inflation ends the explosion of tax revenues in 2022

The collection of tax by tax agency, Gradually, it returned to a more moderate growth rate, after the unusual growth of 14.4% recorded in 2022 in the heat of inflation. In the first seven months of the year, the tax collection of the Tax Agency amounted to 151,953 million euros, 3.9% more than the same period last year (in homogeneous terms, the increase is 5.2%), according to data published this Monday by the Ministry of Tax authorities. Loss of momentum in tax revenues is also a consequence of personal income tax reductions adopted by almost all of the autonomous communities whose effect amounted to 1,677 million until July (1,366 million due to the increase of minimum taxes and the reduction of rates and 311 million due to the increase of deductions).

Income from VAT

In 2022, tax collection is strengthened by a inflation which, precisely, in July of that year, reached 10.8%, and which, on average, stood at 8.6% for the whole year. Not in vain, in July 2022 Collection of VAT It grew at a rate of 17.8%, because it was applied to the prices of goods and services that increased significantly.

In July 2023, with an inflation rate of 2.3% (and an annual average of 3.8% in the first seven months of the year), the accumulated VAT collection in the first seven months of the year It almost grew by 2.1% compared to the same period last year (8.5 times lower than 17.8% last year).

The loss of momentum in VAT collection is not only influenced by the lowest inflation rate. A further reduction in the rate of electricity and gas, which was not implemented in July last year. It didn’t exist before either. zero or reduced rate on some foods which is implemented in January 2023. The Tax Agency estimates that without these measures, VAT will grow by 6.7% instead of 2.1% (in any case, much lower than the 17.8% marked in July 2022).

The truth is that if, on the one hand, low inflation takes the momentum away from tax collection, indirect tax (VAT and special taxes), on the other hand, increased wages and improved benefits This leads to better income.

Salaries, pensions and company benefits

He said Monthly Tax Collection Report corresponding to July 2023, the growth of income depends, “first of all, on the good performance of job deductions and economic activities (11.2% for the continuation of the creation of EMPLOYMENT and the rise of salary, pension and effective rate) and, secondly, in income from the benefits (fractional payments to personal companies will grow by 8.2% and by companies by 24.9%).

All this, together, results in a larger collection of 5,718 million euros in the first seven months of the year, reached a total of 151,953 million, 3.9% more than the same period last year. It is regardless of that tax measuresso they implemented this year, they recovered 5,528 million euros until July. If not for this, the increase in income would have been 7.7% (instead of 3.9%), according to the calculations of the Tax Agency, which did not reach, in any case, the rate of 18% set. for July 2022.

Among other issues, the reduction in income of 5,528 million due to the adoption of tax benefits reflects the impact of the reduction of personal income tax adopted, to a greater or lesser extent, by almost all autonomous communities. The Tax Agency estimates that this effect of 1,677 million until July.

Deficit of the State and all administrations

The Ministry of Finance also published on Monday the data corresponding to the deficit accumulated by the State until July and by all public administrations until June.

In particular, the deficit of the State stood at 37,682 million euros until the month of July, representing an increase of 56.8% compared to the same period last year (24,027 million) and equal to 2.68% of GDP. , compared to 1.81% in July 2022.

According to the Ministry of Finance, this is due to the effect of the final settlements of the 2021 financial system, which will amount to 11,798 million in favor of autonomous communities and local entities, compared to last year, which was 6,106 million in favor in the state..

About the deficit set of Central Administration, Social Security and autonomous communities (not including the balance of local corporations) stood at 30,186 million euros until June, representing a decrease of 5.1% compared to last year and equal to 2.14% of GDP – compared to 2.40% in the same period of 2022 -.

If the balance of aid to financial institutions is included, the deficit decreased to 2.17% of GDP, according to data provided this Monday by the Ministry of Finance and Public Service.

Nation World News Desk
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