The slowdown in activity while employment continues to rise is reflected almost mimetic in the fiscal collection of the first semester, with a good evolution of taxes linked to wages and a stagnation of indirect taxes more linked to activity. Between January and June, personal income tax and corporation tax support the growth in collection (5% in homogeneous terms) after the suspension of VAT and special taxes.
The improvement in wages and employment together with the good evolution of business profits push income from personal income tax and companies by 10%. On the contrary, the weakness of consumption leaves the increase in indirect taxes (VAT and excise) by 0.2%, as can be seen in the graph. The data are always in homogeneous terms.
“VAT and special taxes have stopped, which ties in with the fact that consumption stops”, reflects the director of Fedea, Ángel de la Fuente. In the state accounting data for the second quarter, there was a year-on-year growth in household consumption of 0.5%, which is 1.2 points less than the previous quarter.
The VAT figures are also influenced by the Central Government’s measures to reduce the tax on certain products to deal with inflation. According to the AEAT, VAT collection was reduced by 1,612 million “as a result of the rate reduction in electricity, natural gas, wood and pellets, and in basic foods and feminine hygiene products”. The AFI analyst, César Cantalapiedra, explains that “VAT has a more cyclical behavior and its evolution is also strongly marked by the deleveraging process that families are carrying out and by the slowdown in activity”.
Next year, the reduction in VAT could be offset by the reversal of the measures put in place by the central government in energy and other sectors, reflects Cantalapiedra. In addition, the resurgence of tax rules in the EU will make it difficult to maintain these VAT reduction measures.
With regard to special taxes, collection remains in homogeneous terms thanks to the launch of the new tax on non-reusable plastics. If this were not the case, there would be a decrease in collection until June of 2.8%.
What remains unstoppable is the income tax collection which essentially taxes wages. The AEAT data show that the impact of the reductions on taxpayers was very small: 396 million out of almost 50.0000 million in income for “the increase in the general reduction for work returns for low incomes, the extension of the assumptions to apply the deduction for maternity or the measures related to the returns of personal companies”.
According to the Treasury, the improvement in personal income tax income is due to the more intense increase in employment and salary increases (which amount to around 5%) and the increase in the effective rate. This means that some taxpayers will pay a higher rate as a result of the wage increases they have received. If there is no rate deflation, in these cases you end up paying more taxes. Only around half of the communities carried out deflations of their corresponding autonomous rates.
The director of the situation at Funcas, Raymond Torres, points out that the good performance of income derived from wages is due to the fact that “in the personal income tax there is a more delayed effect, because there was an increase in income and it did not deflate the rate or not much was done”. In his opinion, “the evolution can be seen a year later” so he expects that “the personal income tax will also end up slowing down” as is happening with the VAT. “We will no longer see this strong growth”, he adds.
If total income is compared (not homogenous), the growth in personal income tax of 11% this semester is only exceeded by the same period of the previous year. If they do not disappear, it is necessary to go back to 2008, when it grew by 15% as a result of the real estate bubble that was about to burst. “It is difficult for the personal income tax to continue going at this rate”, concludes Cantalapiedra.
