Mon. Apr 6th, 2020

The increase in prices boosts collection by 8% and cuts the deficit

The increase in prices boosts collection by 8% and cuts the deficit


MADRIDUpdated:

The Government has an unexpected ally to reduce the deficit this year in the form of an increase in revenue that allows to contain the increase in spending that was foreseen in the 2018 Budgets and is approved by the Executive. The state deficit was reduced by 22.6% to 13,245 million through September, at 1.09% of GDP compared to 1.47% a year earlier.

Although the Central Government will fail to meet its target of 0.7% of GDP, the increase in resources, 8.3%, it allows to reduce the increase in expenses of 4.9% derived from the increase of public salaries and other measures of the Budgets.

If you take the joint deficit of Social Security, autonomous communities and the State until August, fell by 14.6% until August and stands at 1.95% of GDP, compared to 2.38% in the same period last year. According to calculations of this newspaper when adding the local corporations from August 2017 to August 2018, the Joint imbalance almost reached 2.7% of GDP, so it would already be below the Executive's forecast.

The main factor that explains this improvement of the accounts is the collection. Tax revenues increase by an impressive 5.9%, mainly driven by the IRPF and the VAT. The first raises 8% more for the creation of employment and the increase of pensions and public salaries while VAT accelerates by 5.3%, above 4% that domestic demand picks up.

The reason is the awakening of prices: with inflation above 2%, public coffers re-enter with pre-crisis strength, a phenomenon that is reinforced as the CPI has left has been installed with an increasing contribution in the last months of the price component

At the moment the IRPF rebate those who earn less than 18,000 euros has little impact on statistics: the reduction in labor income is a decline in income to August of 36 million, although the Tax Agency says it will be "more significant when in October SMEs present his statements »since for the time being« is concentrated on pensions (two thirds of the reduction corresponds to them) ». Even the Corporate Tax grows 4.9% in homogeneous terms.

The autonomous communities They also improve their situation considerably, by increasing their surplus up to August from 728 million in 2017 (0.06% of GDP) to 1,689 in 2018 (0.14%). Part of this improvement is also explained because the settlement received this year of 2016 amounted to 8,855 million, 205 million higher than a year ago.

A) Yes, ten regions registered surpluses: Andalusia, Asturias, Balearic Islands, Canary Islands (with the largest mattress, 1.59% of GDP), Cantabria, Catalonia, Galicia, Madrid, La Rioja and the Basque Country). The community with the highest deficit is Extremadura, with 0.32% of GDP, although it improves its situation compared to last year. Those that worsen their numbers are Andalusia, Balearics, Cantabria, Castilla la Mancha, Catalonia, Navarre Y Valencia.

Refering to Social Security, the numbers improve even though the extra monthly payment of Christmas to pensioners and the need for financing of the system will cause the deficit to shoot up by the end of the year. At the moment, until September the imbalance was reduced: the deficit of the system amounts to 0.45% of GDP, 5,450 million, which is 561 less than a year before. Income from social contributions grew by 5.45% to 85,837.66 million euros while spending on pensions rose to 93,303 million, an increase of 4.85%.

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