2023-05-01 16:30:45
One more point of fiscal pressure. The proportion that tax revenues (taxes and social contributions) will mean this year on the economy as a whole will rise to 39.7%compared to 38.7% in 2022, according to the stability program update 2023-2026 sent by the Government to Brussels. And this weight gain will continue, although to a lesser extent between 2024 and 2026with 40.1%, 40.4% and 40.6%, respectively, which attributes to economic dynamism not to generalized tax increases and to the fight against fraud.
The Executive of Pedro Sánchez explains in this document, in which he “confesses” before the community authorities, that this year the tax collection will reach 359,080 million euros, which represents an increase of 8.8%, although a slowdown compared to 11.4% last year. One of the main commitments is that already in 2024 the public deficit it will drop to 3% of GDP -one year earlier than estimated in its latest projections- and it is predicted that it will continue to drop in the following years, until it drops to 2.7% in 2025 and 2.5% in 2026.
That goal, if met, could leave Spain out of the reinforced budget discipline that the European Commission is designing. The Brussels legislative proposal for new tax rules in the euro area, suspended after the outbreak of the pandemic, has incorporated the requirement, especially from Germany, that countries with a deficit above 3% of GDP must assume a minimum annual adjustment equivalent to 0.5% of GDP. The new rules are expected to be effective for the preparation of the 2025 Budget, which must be addressed in 2024.
Although he admits the impact of inflation on higher collectionsn, the report sent to Brussels also attributes the greatest weight of tax revenue, in addition to new tax figures (banking and energy) to economic dynamism. The document maintains the forecast of growth of 2.1% this year. The latest data from the Institute of Statistics on growth in the first quarter point in this direction with an increase in gross domestic product (GDP) of 0.5%, one tenth more than in the fourth of 2022 (which was revised upwards, up to 0.4%), thanks to the impulse of the exports and investment. If compared to the first quarter of the previous year, the Gross Domestic Product (GDP) achieved a year-on-year increase of 3.8%%, nine tenths more than in the last period of 2022.
In the Government’s opinion, the evolution of collection “is explained by the dynamic evolution of GDP nominal, supported by both real factors and the price evolutionwith a GDP deflator estimated at 4%, which will, however, slow down along the path until reaching values already below 2%”. The document highlights that the analysis of the evolution of tax revenues since 2000 reveals that they increased above the growth of the economy even in periods of negative inflation and concludes that “although inflation contributes to the increase in tax revenues, the evolution of the CPI is not the main factor that explains the positive or negative evolution of fiscal magnitudes, the evolution of GDP being much more decisive”.
The Secretary of State for Finance, Jesús Gascón, already admitted in Congress that last year tax collection grew by around 15% in the whole of 2022, which allowed the State Tax Administration Agency (AEAT) to obtain income of some 10,000 million above what was forecast by the Government, despite the energy tax cuts undertaken over the past year.
The document ensures that the increase in income “would be even greater if it were not for the tax measures introduced to alleviate the escalation of energy pricesa, which have had a negative effect on the expected collection of taxes on production and imports, since the same, except for the reduction in VAT on food They will continue until December 31.
At the same time, he anticipates that the revenues forecast for 2023 will be positively boosted by the tax measures introduced in the State Budget for 2023, such as the tax on energy companies and banks, as well as the tax on wealth of more than three million euros. . The effects of these taxes, which were initially established on a temporary basis for two years, will continue throughout 2024. It also highlights the income from fight against fraud and the underground economy that will surface, that will allow the income “to increase the next few years above inflation forecasts“.
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The document also highlights that social security contributions will register a growth of 9% this yearwith which they will represent 13.9% of GDP, “due to the good behavior of employment already observed in the first quarter of 2023, the already verifiable improvement in contracting conditions promoted by the labor reform, and the rise of the minimum interprofessional wage (SMI)”.
The figures include both for 2023 and for subsequent years the effect of the MEI (intergenerational equity mechanism), of the pension system, the impact of which will be progressive over the coming years, as well as the rest of the measures of the recent reform of benefits “that allows us to ensure the sustainability” of the system.
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