Accrued taxes and tax revenues

In 2018, taxes accrued grew by 5.7% (6.1% if only the four main figures are included; Table 1,4). Both in one and the other case, growth is very similar to that recorded in 2017 (5.9% for the total and 5.8% for the main figures). The increase in accrued taxes is similar to that recorded by tax revenues, after the impact of the SII (2017%) was eliminated in 2018 and 5.4. This indicates that the differences caused by the different moment of the income record (the accrual period in the first case and the income or return in the second) barely influenced, in aggregate terms, in 2018, as can be seen in Figure 1,16, which illustrates the process of generating tax revenues from the taxable base.

The Personal Income Tax accrued grew by 2018% in 5.3, below 6.2% in the previous year (Table 2,1). Given the stability of the effective rate, growth was exclusively due to the favourable evolution of the incomes. The lower increase in the tax accrued compared to 2017 is a result of the negative impact, as indicated in the previous section, caused by the extension of family deductions. This also explains the difference in 2018 between the variation in the total tax (5.3%) and without the differential tax or family deductions (6.3%).

The main component of the tax, withholdings on work income, grew by 2018% in 6.5 (2017%). 4,5 This is the same rate that was recorded in wages (Table 2,3) and that, as a new feature in 2018, it came not only from the increase in employment, but also from the increase in the average salary and the rise in the cash rate that it entailed. Pension withholdings grew by 6.7% (5.3% in 2017). The growth of the rate that in recent years accounted for more than half of the growth in withholdings, in 2018 it was limited by the the increase in the reduction due to earned income that favored lower pensions, but in return, the increase approved in the Budgets led to a significant increase in the bases.

In 2018, income tax on personal income tax rose to €82,859 million, 7.6% more than in 2017. The discrepancy between the growth of the accrued tax and that of the income is justified by the annual tax return that includes each measure. The tax accrued includes the 2018 tax return to be settled in 2019 and that, as has been seen, is expected to have worse results that in 2017 due to the increase in family deductions, while income contained the results of the 2017 tax return filed in 2018 and which contributed almost 1,000 million euros to the growth of the collection. 

Corporation Tax is expected to grow by 2018% in 15.1 (11.1% without the differential payment to be presented in July; Table 3,1). The main component of the tax is the instalment payments that grew 11.9% in 2018. The performance of these payments was very different in the different groups of taxpayers (Table 3,2). In Large Companies and consolidated groups, which pay tax according to their profits, the increase in payments reached 13.5% (18.3% in groups and 5.4% in non-group companies), well above what was achieved in 2017. The improvement was very concentrated in the groups, and in particular in a small number of them; In the rest of companies, growth in 2018 was lower than that of 2017. It is also worth highlighting the increase in the contribution of the minimum payment in these results. Payments in SMEs (which are taxed according to the last annual fee filed) grew by 2.3%, which led to a sharp contraction with respect to the growth of the previous three years.

Tax revenues grew to €24,838 million, up 7.3% on 2017. The difference with respect to the tax accrued is the result of the advance of the rhythm of the return. If this element is corrected, the growth of income would be 12.8%, which is closer to accrual.

In cash terms, the two determining factors in 2018 were the evolution of the aforementioned deferred payments and the increase of 14.1% of refunds (Table 7,2). Remember that these refunds are not derived from the activity in the year, but are linked to previous tax returns and settlements.

The VAT accrued grew by 2018% in 5.6, the same increase as the taxable amount (Table 4,1). In 2018 there were changes in some types, but their impact on the tax as a whole is marginal.

VAT revenue amounted to €70,177 million, 10.3% more than in 2017 (Table 4,2). The figures are affected by the impact of the SII. If corrected, growth would be 3.7%. The difference between accrual and the cash was mainly due for two reasons: The high volume of refunds made corresponding to the previous year and the adjustments with the regional territories, and the drop in the revenue of previous periods (as a result of changes in the management of deferrals that took place in 2017 and whose effects were dragged in 2018).

Special Taxes accrued grew by 1.9% in 2018, compared to 0.2% in 2017 (Table 5,1). As noted in the discussion of the bases, the recovery is not explained both by the positive evolution of consumption and by the irregular behaviour of the same in 2017, particularly in tobacco and alcohol. In the tax accrued in Hydrocarbons, the figure of greatest weight in all these taxes, the growth in 2018 was 1.8%, below the 2.6% achieved in 2017 (Table 5,4). The cause of the lower growth was the drop in natural gas consumption (a decrease associated in most of it to the lower use of the same in the generation of electricity), and, in the last stretch of the year, the elimination of the tax for this product and for diesel and oil for the same purpose as that introduced by RDL 15/2018. In the most consumer products, petrol and gas oils, growth in 2018 was similar to that of the previous year (2.4% and 2.1%, respectively), although the result was obtained, above all, by the increase of around 5% in heating oil, which is more volatile and less linked to the general economic activity. The Tobacco Tax grew by 2.4% (- 4.8% in 2017; Table 5,5). The irregularity of the series is disturbing the diagnosis that can be made of this figure in which the consumption and the tax accrued are practically stabilised since 2013 with 2,100 million packets and 6,600 million euros a year. The accrued Electricity Tax increased by 4.4% in 2018, almost 3.5 points more than in 2017 (Table 5,6). Most of the growth was due to the irregularities that occurred in May 2017 in the turnover of some companies, which makes it seem that consumption grew more than it actually did in 2018. Carbon Tax recorded a sharp decrease of 15.1% (Table 5,7), compared to the high level of income that had been achieved in the tax in 2017, coinciding with the problems of drought and the use of coal as a substitute for river sources. Even so, and with a wider perspective, the 2018 income was only slightly lower than the average of 275 million euros per year for the period 2014-2017. Finally, in alcohol taxes, revenue grew overall by 1.8% (0.5% in 2017) due to the recovery in Alcohol and Alcoholic Beverages and despite the deceleration in beer consumption (Tables 5,2 and 5,3).

In 2018, the tax revenues from Special Taxes totaled a total of 20,528 million, which represented 1.1% more than in 2017. The small differences with accrual, particularly concentrated in tobacco and alcohol, are still the result of the 2017 movements in income accrued in the last few months of 2016, after the rate increase of then.

The rest of the tax figures other than the four main figures represented income of 10,284 million, 4.8% more than in 2017. Practically all the increase is due to Income Tax for Non-Residents. In 2018, its income grew by 17.2%, which is explained by the evolution of the incomes subject to withholdings (especially due to the improvement of dividends) and the result of the annual tax return (Table 6,1). In the positive aspect, environmental taxes under Chapter I (3.6%) and Other income in Chapter III (6.4%) were also highlighted. In the negative part, the drop in income from fees must be noted (- 11%; Table 6,5) as a result, basically, of the decrease in revenue from the Canon due to the use of continental waters for energy production electricity (- 43.9%), affected by the drought in 2017 (a year that was settled in 2018) and despite the increase in the rate that came into force in 2018.