Tax collection continues to go from strength to strength despite the dark clouds surrounding the economic forecasts. Until April, tax revenue grew by 18.1%, to 85,922 million euros, driven above all by work withholdings and VAT. The Tax Agency, which this Monday has published its latest monthly collection report, highlights as “underlying causes” of this rebound a reactivation that has crystallized in employment growth, increases in wages and pensions and improvement in spending favored by the rise in prices.
The behavior of collection has followed the same trend since the beginning of the year: VAT and personal income tax are the taxes that drive the growth in collection, which continues to be sustained despite the tax reduction measures adopted to deal with the energy crisis. In 2021, tax revenues had already reached maximums, with a record collection of 223,385 million.
Part of this increase is explained by the growth of the aggregate tax base of the main taxes, which grew by 14.5% in the first quarter of the year. The bases related to rents rose by 12%, and those linked to spending by 18.4%, pushed by inflation and above all by the increase in the cost of energy products.
More work and salary increase
Personal income tax experienced a rebound in income of 13.4% up to April, and 22.4% in the month, even higher than that which had been occurring since the beginning of the year. According to the Tax Agency, this increase is fueled by a mixture of factors: the growth in withholdings from large companies, the good quarterly results of SMEs, both in job withholdings and in installment payments from personal companies, and the improvement of capital withholdings. To all this we must add the revaluation of pensions due to the rise in prices and the rise in withholdings from public salaries.
So far this year, retentions from work and economic activities accumulate an increase of 13.1%. In the private sector, the increase was 16.3%, which was influenced by the acceleration in income from large companies thanks to greater job creation, salary increases ―which drive the increase in the effective average rate―, as well as an increase in the number of large companies. The public sector also gave a boost to income from job retentions, with an increase of 9.1% in April and 11% in the year, driven above all by pensions.
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Another of the figures that experiences advances in its income is the corporation tax, also thanks to the lower returns made. In April, the first payment on account of the year is also entered, which, adjusted for the extraordinary income that occurred in 2021, increased by 18.4%, in line with the other taxes.
Revenues from special taxes (+7% until April) continue to suffer from the reduction in the Electricity Tax rate, an invoice that until April totaled 681 million euros. Adjusted the collection of this effect, the resources provided by this figure would have grown almost 18% in the first four months of the year, an increase similar to the rest of the figures.
If all the fiscal measures adopted to reduce the impact of the rise in energy prices are considered, the bill for the public coffers stands at 2,233 million euros so far this year, and rises to 3,838 million since they started working. In April, these measures caused an additional loss of collection of 333 million: 144 in VAT and 189 million in Electricity Tax.
On the other hand, the covid measures – especially the largest postponements that occurred in 2021, with a negative effect on that year – have had a positive impact on more than 260 million. As a whole, the regulatory and management changes have caused a decrease of 1,394 million until April, a figure that reduces the growth of tax revenue by almost two points.