Income tax collection falls by 34%

Despite the increase in the tax burden, the Tax Agency has collected 55% less than it had planned to collect and 34% less than in the previous year. What explains the final result and the discrepancy between forecasts?

 

Although 24,013,000 million tax returns have been completed, 4.9% more than last year, the Tax Agency has collected less than half of what it had planned at the start of the 2023 Income Tax Campaign.

According to elEconomista‘s analysis of the official data, a total of 16.2 million returns have resulted in a refund of 13,576 million euros, compared to the 11,650 million that had been expected. Therefore, taking into account the lower collection and the increase in the amount to be returned, the net collection will be 3,216 million euros, 55% less than the 7,258 million euros expected to be paid this year and 34% less than the 4,900 million euros collected in 2022.

These figures may seem contradictory when taking into account the increase in the tax burden and the fact that the Spanish economy grew by 2.5% in 2023, five times higher than the eurozone average. Specifically, domestic demand accounted for 1.7 points of growth in 2023, while external demand accounted for the remaining 0.8%. So how can this drop in revenue be explained in the face of GDP growth and tax rises?

 

Has the data been manipulated?

Marc Vidal, technology and economic analyst, has examined the results and points out that the government’s forecasts are unreliable, as they are based on data that do not reflect reality: “The tendency to manipulate the data to make them look more favourable generates serious distortions, and this is a clear example of it”.

On the other hand, Vidal does not rule out the possibility that the increase in taxes is stifling people. “It is possible that the higher tax burden and the increase in taxes are reducing the capacity of Spaniards to generate wealth or invest, which in turn reduces the final tax collection”. A fact confirmed by the latest report presented by the Institute of Economic Studies (IEE), according to which the tax burden in Spain is almost 18% higher than the European Union average. This places Spain among the OECD economies with the highest taxation, in 31st position out of the 38 countries analysed.

This situation can end up hurting economic activity, so that tax revenues and refunds are not spent on goods, services or investments, but rather on survival. As the analyst warns: “A government that does not know how to reduce the size of the administration and believes that everything can be solved by raising taxes will only amplify this disconnect between what it wants to receive and what can be given”.

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  1. Joan Santacruz CarlúsJoan Santacruz Carlús says:

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