The Spanish government estimates that it will be able to allocate up to 25,000 million more to anti-crisis measures

MADRIDThe Spanish government, under the baton of the Ministry of Finance, has sent the traditional Budget Plan to Brussels. This year, however, with a novelty: it incorporates different forecasts in parallel with those budgeted in the public accounts for 2023. It is a scenario two in which the revenue part is much more favorable than that estimated by the executive, both for this 2022 and for 2023, and which incorporates updated figures up to October. In fact, the government has always emphasized that it prepares “prudent” public accounts.

Specifically, the Ministry of Finance admits to Brussels that it can collect almost 25,000 million more in taxes between 2022 and 2023. This possible fiscal margin would be used “to extend and adopt those most appropriate measures, with the aim to protect the families, workers and companies most affected by the energy crisis”, according to the document sent this Saturday.

With this money, the Spanish government justifies before the community executive that it has room to extend the measures of the energy shock plan, in force until December 31. In fact, the president of the Spanish government, Pedro Sánchez, already confirmed this week that he would allocate 3,000 million of the 2023 State budget to the reinforcement of the electricity and thermal voucher for vulnerable families, as well as to the creation of ‘a new regulated tariff (TUR) for communities of neighbors with central heating that until now could only access the free market.

Specifically, the measures that are at stake and which expire on December 31 are the tax reductions in the VAT on electricity and gas, the abolition of the generation tax or the reduction of the special tax, as well as the bonus of 20 cents per liter of fuel, among others. But social expenses have also increased, such as the heating and electricity voucher, the minimum living income and non-contributory pensions. Looking ahead to 2023, in the case of the IMV it will increase based on inflation.

How can it be that, despite the tax cuts, there is more income? The government has decided to incorporate this second scenario due to the current situation “characterized by a high level of uncertainty and inflation resulting from the war conflict in Ukraine” and links the possible increase in tax revenues to the “good progress of the economy” but not directly to inflation, an element that also gives wings to the taxation of fiscal figures such as VAT, due to the increase in prices, or personal income tax. The government takes the brunt of GDP growth this 2022 (it estimates it will be 4.5%), but also of the labor market. In addition, in the plan sent to Brussels, he recalls that new tax figures will be put in place, such as the banking and electricity tax or the increase in the tax on capital income above 200,000 euros.

Specifically, the second scenario foresees for this year revenues of up to 331,188 million euros, which translates into a growth of 11.8% compared to 2021. In contrast, the budgets estimated a growth of 7.6%. As for 2023, although in the budgets presented just a week ago tax revenues of up to 344,627 million euros are collected, in the second most favorable scenario these revenues would grow to 354,283 million. Total: 20,490 million more in two years.

The debt and the deficit remain

However, the Spanish government does not change its forecasts for either the debt or the deficit, which for this 2023 it estimates will go from 5 to 3.9%. “The Spanish economy maintains its resilience with strong growth, an intense creation of the labor market and the reduction of the public deficit and debt”, they point out from the Ministry of Economy. In fact, from the portfolio headed by Nadia Calviño they publicly confirm that since 2019 and following the measures adopted during the covid-19 crisis, there has been an “emergence of the underground economy”, which, for the first time, they amount to 285,000 members of Social Security.