Gross tax bases

The taxable bases of the main taxes grew by 4% in 2019 as a whole, almost two points less than in 2018 (5.8%). This is the first year since 2014 in which annual growth has been lower than that of the previous year. The increase is similar to that recorded by the sum of domestic demand and employee compensation, which are the two reference macroeconomic indicators.

The slowdown in growth was observed both in the bases linked to income and in those linked to expenditure , although with greater intensity in the latter. In the first case, growth in 2019 was 4.6%, one and a half points below the rate estimated for 2018; In terms of expenditure, the increase is 3%, down from the previous 5.3%.

Both the slowdown in growth and the evolution within the year were marked, mainly, by four facts: the different behaviour of household incomes in the first and second half of the year due to the step in growth that occurred in the second half of 2018 following the increases in public salaries and pensions brought about by the approval of the Budgets in July; the fall in the corporate tax base in the third quarter compared to an exceptionally high figure from the previous year; the progressive moderation of domestic demand that affected spending subject to VAT; and the drop in energy product prices in the second half of the year with its subsequent effect on the value of Special Taxes consumption. These four elements caused growth in the first half of the year to be higher than in the second, although the differences were really concentrated in the third quarter.

household income grew by % in 2019 (6% in 2018). The behaviour was very different in the first and second half of the year due, as indicated, to the impact of the increases in public salaries and pensions included in the 2018 Budget since July of that year, to which new increases were added in 2019. Chart 1.11 shows this effect on wages and pensions, which are the main components of household income. The chart clearly shows the upward trend in the third quarter of 2018, its continuation for four quarters and its moderation in the second half of 2019. The growth recorded in this last stage did not reach the level observed before the step because it hid the slowdown that was occurring in the private sector as a consequence of the slower pace of job creation. The final result was a growth in the total of salaries and pensions during 2019 slightly lower than in 2018 (5.1% compared to 5.3%).

Capital income (furniture, leases and capital gains) increased by 7.1% in 2019 (Table 2.1). Growth was half of that experienced in 2018 (14.5%), but the latter had a peculiar behavior due to the advance payment of income to avoid the rate increase announced for 2019 and which was manifested in strong increases in income from movable capital and capital gains. The same thing happened in 2019, but not with enough intensity to modify the results for the year as a whole. In any case, the 2019 rate adds to the high growth recorded in the last three years.

As regards companies, it is estimated that the consolidated tax base of Corporate Tax grew by 0.5% in 2019. Profits are believed to have grown by 2.3% over the same period. In both cases the results were lower than those of 2018 (6.1% and 9%, respectively). Similarly, the information on the evolution of profits that can be deduced from the declarations presented in 2019 by Large Companies and groups implied a fall in profits, concentrated in the groups (five of them that had an exceptionally good performance in 2018 explain the entire decline), while in Large Companies the growth would have been in the order of 1%.

In the part referring to spending, final spending subject to VAT grew by 3.4% in 2019, more than a point and a half below the increase recorded in 2018. The downward trend was mainly due to the general slowdown in the economy, but also to the moderate increase in prices. All expenditure components (households, public administration, housing) showed the same trend, although it was more pronounced, in terms of rates, in the sale of new housing.

Finally, the value of consumption subject to Excise Taxes grew by only 0.6% in 2019 (7.2% in 2018). The drastic changes observed in this series are usually due to the evolution of energy prices, particularly those related to gasoline and diesel. In 2019, these prices grew by 1.2%, with all the growth accumulated in the first half of the year (in the second half they decreased by 1%); In 2018, however, they rose by more than 9%. However, if we look at physical consumption, the results are not much better. In the main figures, consumption grew very little or decreased: The consumption of gasoline and diesel increased by 0.5% (almost two points less than in 2018), electricity consumption decreased by 1.8% and the withdrawal of cigarette packs from tax warehouses decreased by 1.9%. Only the consumption of alcohol subject to Excise Taxes increased compared to 2018 (1.7% for alcohol and derived beverages and 2.3% for beer), and at a faster rate than before.