The Independent Authority of Fiscal Responsibility (Airef), the body created in 2013 at the request of Brussels to ensure the sustainability of public accounts, believes that the Government of Pedro Sanchez will widely violate the public deficit target at 1.3% of GDP because public revenues of State Budgets They are overvalued. Their calculation places the size of the red numbers of the public administrations at 2.2%, according to what has been advanced on Tuesday by José Luis Escrivá, president of the Airef, in his appearance in the Budget Committee of the Congress to analyze the public accounts project for 2019.
The main responsible for this deviation, as occurs in recent years, are the Central Administration and Social Security. In fact, the Airef considers that the agency in charge of sustaining pensions has "very unlikely" to reduce its budgetary deviation to the level agreed with Brussels.
This calculation of the Airef would suppose that the Executive of Sanchez would not fulfill the budgetary objectives nor softening them as it has tried when changing the Law of Stability. The Executive tried to relax the fiscal effort by placing the target at 1.8% of GDP, which would give it more budgetary margin and allow it to adjust less, but it has met with the political blockade of the PP and Citizens in the Senate. But even if they managed to change the goal they could meet according to the projections of the Airef.
Little power of Google and Tobin rates
The Airef attributes this "improbable" compliance to that tax revenues are overvalued. In fact, it calculates that the new fiscal measures (increase of the tax of sociades, IRPF, Google tax and Tobin tax) will collect almost 2,750 million less than what the Government calculates. The Treasury had estimated that all these tax measures will report some 5,654 million euros to public coffers, compared to 2,908 million euros projected by the Airef.
The big difference in calculation is due to the new taxes: the Google and the Tobin tax. While the Department headed by Minister María Jesús Montero believes that they will be able to scratch some 850 million and 1,200 million respectively, the Fiscal Authority limits the collection impact of these measures to 160 and 189 million respectively. Escrivá attributes this difference to the delay in approving the laws with the new taxes, which will probably not be effective until the last quarter of the year.
The Airef, in addition, excludes from its calculation of income the 5,000 million tax collection that the Treasury has collected in Budgets for an accounting trick. The Government has considered 13 months instead of 12 of income provided by the Immediate Information System, the digital system to pay VAT immediately. But the Airef believes that this change only affects cash and not in National Accounts, the accounting system to quantify the deficit. In this way, the accounting trick of the Government will be without effect.
Social Security, the biggest hole
Escrivá believes that the Town Halls and the autonomous communities, the two subsectors that took the most criticism during the years of crisis due to their inability to control the deficit, will be the only ones that comply with their budgetary duties. The improvement of the regional and local financing will allow these territorial administrations to continue the reorganization of their finances. In fact, the Airef believes that the municipalities will maintain a surplus close to 0.5% of GDP despite being in the election year. "The City Councils will raise spending in the election year [en mayo de 2019 están convocados comicios autonómicos y locales]", has indicated Escrivá." The State gives them about 20,000 million of financing and the Town Councils deposit in the banks about 7,000 million. And this happens year after year. "
At the other extreme, Social Security and the central government will not meet the deficit, according to the analysis of the Fiscal Authority. The Airef considers that the projection of income and expenses made by the Government of Social Security contributions and pensions are correct, but the great imbalance is so much in the new measures to raise income (especially in the increase of the minimum base of quotation) as in the exclusion of some adjustments of National Accounts.