Purchases, as in this Gipuzkoan supermarket, are boosting VAT collection. /
The Provincial Treasury collects until July 745 million for the tax levied on consumption, a figure never seen before, with a runaway CPI
Inflation and the incessant escalation of prices has become the ‘leitmotiv’ of any conversation. It is not for less. While the pockets of taxpayers have less and less cash, there is the curious paradox that the Provincial Treasury fill their coffers with the tax that taxes consumption, the second most important after withholdings for work (IRPF).
And it is that the collection accumulated until July for this concept has increased by 8.4% in Gipuzkoa (57.7 million more) compared to the same period last year, registering a figure never seen before at this point in the year of 745.1 million euros –see attached graph–, after proceeding to recover through inter-territorial adjustments the part of the VAT generated in the territory. It was, precisely last year, when the regional entity reached its second best mark for this tax (687.4 million), driven by the exit of the pandemic and the end of the restrictions, with a percentage variation in green of 27.3 %.
In the case of Bizkaia, this item has also increased by 7.9%, and in Álava by 6.7%. On this occasion, the second of the VAT adjustments has also been recorded with the Tax Agency. In other words, the amount agreed between the central and Basque administrations that Basques are considered to spend above that 6.24% collected in the Quota. This mechanism has facilitated the arrival of more resources, such as 646 million in Bizkaia and 121 million euros for Gipuzkoa.
Caution
Sources from the Gipuzkoa Provincial Council confirm this good trend, and attribute it to the fact that consumption in society has not fallen despite inflation, as well as to the remnant accumulated by families during the last two years of the pandemic. However, it is advisable to be cautious and wait until the end of the year to have a more accurate photograph. It was, precisely, the councilor Arantxa Tapia, who assured in this newspaper at the beginning of July that «nothing is ruled out at the moment, not even the recession. With very high inflation and energy prices as they are, we are looking at a winter in which we do not know what will happen to the gas tap. The situation is very complex. We have to be realists”.
The Consumer Price Index (CPI) shot up to 10.5% in the Basque Country last July, and represents the highest rate since April 1985. This price increase has a direct impact on VAT collection, a consumption which in summer continues to grow due to tourism and the remnant that families have after almost two years of the pandemic. These are the main ingredients that have allowed the Provincial Treasury of Gipuzkoa to achieve a collection record for this tribute until July.
A part of this increase in collection is due to inflation, but not all. A significant portion is due to increased consumption. In fact, the special or indirect taxes more linked to consumption are also skyrocketing. The increase in fees collected for hydrocarbons stands out. The tribute has benefited from the increase in the price of gasoline experienced during the second quarter. Thus, it has meant 15.6 million more (+6.8%) for the coffers of the Gipuzkoan Treasury (a total of 244.4 million). A figure that represents the ceiling of the collection of this tax in the first seven months of the year.
Another of the most important aspects of the behavior of collection so far this year is the increase in returns regulated by law, a symptom of the search for liquidity by taxpayers and companies in this uncertain economic situation and, at the same time, , of the effort of the Treasury to accelerate that injection of oxygen to the tissue. Thus, refunds up to July increased by 20.3% (especially those linked to VAT with 23.9%), and net income grew by 10.9%. For sample, a button. According to this week’s data from the Foreign Trade Institute (ICEX), Gipuzkoa’s foreign sales registered record sales in the first half of the year for a value of 4,964.3 million, which translates into an increase of 27.6 % compared to the same period of the previous year, when they reached 3,889 million.
Battery of fiscal measures
The Provincial Treasury, aware of the incessant rise in prices and the impact of inflation on the pockets of citizens, approved last July a battery of fiscal measures of 250 million euros. This retaining wall against the pressure of the CPI has as its vault key the deflation of all sections of the Personal Income Tax by 4% as of September.
Deflation, in practice, supposes a sweetening of the tax to, at least partially, try to prevent salary increases lower than the rise in the CPI from condemning taxpayers to jump from the personal income tax bracket and thus being doubly punished by inflation. losing even more purchasing power.
In Gipuzkoa, and according to what this newspaper learned, the total savings for citizens (and, therefore, the consequent cut in tax collection for regional coffers) will be 84.6 million euros. Of that amount, 44.8 million will correspond to that universal advantage linked to the deflation of personal income tax and the remaining 39.8 million to the deduction approved by the three territories.