2023-10-20 00:32:54
Leave the money in public coffers to meet Brussels’ fiscal demands or in citizens’ pockets to alleviate the impact of rising prices. That is the decision that the Government of Spain must make before the end of the year to maintain or eliminate the VAT reductions on food and energy. At the moment, they disappear in the budget plan sent to the European Union. The measure, assuming that aid for public transport continues, would cost the Basques 220 million euros, which is what would increase the price in the shopping basket and the electricity bill. It would represent almost one point of the CPI and 0.3% of the GDP of Euskadi.
The other side of the coin is that, in the adjustment of taxes between councils and the General State Administration, the provincial treasuries would increase their income with those 220 million. They would be the great beneficiaries of the measure. And they would also do so in a year, 2024, in which the Basque Finance Council has forecast the smallest increase in collection since the pandemic, 4.9%. And, as the Minister of Economy and Finance of the Basque Government, Pedro Azpiazu, explained last week, the slowdown in the euro zone “will be felt, sharply in the Basque industry.” In fact, the provisions for Corporate Tax, which taxes company profits, fell for the first time in Gipuzkoa (7%) and in Álava (4%).
crash plan
The tax reduction on light and electricity saved Basques 96 million in the last year
The economic scenario is not the most favorable either. In fact, Basque councils and the Basque Government have just agreed on a deflation in personal income tax of 2.5% for next year, which will mean ceasing to collect 100 million. In addition, the PNV is analyzing how to also extend the tax aid of up to 200 euros for incomes of less than 35,000 euros claimed by the PSE-EE. The provision is favorable, but Executive sources point out the need to analyze it in light of the progress of collection and the economy. The priority, they maintain, is to guarantee income that ensures the public policies of the entire Basque institutional framework.
In short, a complicated adjustment in which to combine many pieces. The fact is that the reduction of VAT on energy, in the tax adjustment with the Ministry of Finance, has meant a reduction in tax revenue for the Basque Country in the last year of 96 million. Of them, 53.7 million correspond to the reduction in the tax on electricity consumption and 23.2 for generation, while 19.6 have been for VAT on gas.
The shopping cart
This is money that escaped the provincial treasuries but remained in the pockets of taxpayers, like the 92.8 million in which the Basque effect of the VAT reduction on basic foods is calculated.
The moment is delicate because it is precisely in the supermarket where the price increase is refusing to give way. Last September, according to the INE, the shopping basket continued to skyrocket above 10% compared to the same month in 2022. In certain products such as oil, the increase is accentuated by up to 67% so far this year, due to 40.5% sugar or 20.5% potatoes.
Near East
The conflict has generated a rise in oil and gas prices that will be reflected in the CPI
Furthermore, the conflict in the Middle East does not help to predict a drop in the CPI, which in September rose 9 tenths, to 3.5%. Since the attacks broke out, oil is approaching $100 per barrel and gas has accumulated an increase of almost 50% in just two weeks, going from 30 euros per Mwh to 50.
This year, the universal aid for fuel, the 20 cents per liter, was no longer applied. A subsidy that was activated by the central government and that amounted to 360 million euros in Euskadi last year.
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