2.2. Net tax collection

The net tax collection is the gross revenue net of refunds paid, including adjustments with the Basque provinces and Navarre. It is therefore set on a cash basis, unlike other items, for the purpose of National Accounts, like the recognised rights or the taxes

The tax revenues managed by the Tax Agency rose in 2012 to 168,567 million, with a 4.2 per cent growth with regard to 2011, practically coinciding with the ones budgeted (159 million less). The degree of compliance with the budget was the result of the influence of factors of different nature: the taxable incomes of the main taxes were less than what was planned, but this negative factor was compensated by the impact of regulation measures carried out in the middle of the budgetary year and by the increase of the collection derived from control actions.

(Millions of euros)

Annex:

The added taxable base dropped for the fifth consecutive year, this time by 3 per cent, a drop similar to that of 2011. The drop takes place with great consequence in incomes (due to the contraction of the incomes of homes and companies' profits) and in the expense subject to Value Added Tax, harmed by the lowering of consumption, purchases and government investment, and the persistent deterioration of the real estate market.

Annex:

The collection increased due to the impact of the regulatory changes, both of those that were already foreseen when elaborating the Budget and of those that were approved in July 2012, whose effects on the collection were noticed in the final stages of the financial year. The fiscal consolidation measures generated an 11,237 million income increase. Of this amount, the portion raised due to the changes introduced in July is calculated to be 5,119 millions, especially from the increase in excise tax rates of the Value Added Tax and the measures of expansion of the staged payments of the Corporation Tax.

Throughout the year, as it is detailed in the following table, we can clearly see the collecting impact that the measures had that affected the staged payments of the Corporation Tax (5,925 million). The effects of the Supplementary Tax were also very relevant (with implications in the incomes from the Personal Income Tax, the Corporation Tax and the Non-Residents Income Tax, reaching 3,931 million), of the Value Added Tax rise (2,441 million) and of the extraordinary measures related to the Special Tax Return (1,196 million) and to the Special Tax on Dividends (89 million).

In addition to the impact of regulatory measures, the growth in revenue was also boosted by the significant increase in revenue from deferrals from previous years and from control actions. Revenue from these items amounted to 16.103 billion in 2012, an increase of 19.6 percent over the previous year. Just over half of this revenue comes from control activities, which grew by 10.1 percent in 2012.

Personal Income Tax

As regards the evolution of revenue from the main taxes, in 2012 the collection of Personal Income Tax grew by 1.2 percent (815 million). The growth is explained exclusively by the impact of fiscal consolidation measures (3,525 million). Without these measures, income would fall by 3.9 percent, the same drop estimated for gross household income. Within these, labour income fell by 3.6 percent (with a greater fall in the wage bill partially offset by the increase in pensions), capital income by 6.4 percent and personal business income by over 5 percent. The most important quantitative component of household income, wages, fell significantly (6.2 percent) due to the sharp decline in salaried employment and the reduction in average wages, which was most pronounced in the public sector due to the elimination of the December bonus. The increase in withholding rates counterbalanced this drop in income, so that income from withholdings was almost the same as in 2011.

Corporation Tax

Corporate tax revenues grew by 29 percent (4.824 billion) in 2012. The growth is explained by both regulatory measures and the increase in revenue from inspection reports. The regulatory changes had a very significant impact on the calculation of advance payments, which increased by 41.3 percent, with a particular impact on consolidated groups (84.8 percent). In other large companies, the increase in payments was 26.3 percent, while in SMEs, which calculate their payment according to the quota of the last annual declaration submitted, the fall was less than in 2011 (6.1 percent).

The increase in corporate tax revenues occurred despite the fact that available information on profits indicates that these continued to fall. In order to analyse the profits in 2012 from tax returns, it is necessary to correct the impact of regulatory changes, which affected not only the rate but also the tax base, increasing it. After this correction, the tax base has dropped similarly to that recorded in 2011 (19.6% compared to the previous 18.7%). This result is not uniform by type of company: Consolidated groups showed a decrease of around 50 percent (which is not observed in payments for regulatory changes) while large companies not integrated into groups recorded a positive rate of around 3 percent.

Value Added Tax

Value Added Tax revenue in 2012 grew by 2.4 percent (1.162 billion). Final expenditure subject to VAT, which is the basis of the tax, is estimated to have fallen by 5 percent in 2012, a slightly smaller drop than that recorded in 2011 (5.8 percent). By component, household consumption expenditure fell by 3.2 percent. Housing spending again fell sharply (14.2 percent), although this was lower than in 2011 (28.8 percent). There was a better performance at the end of the year, but for temporary reasons due to the tightening of the tax burden from 2013 (end of the deduction in Personal Income Tax for the purchase of new homes and increase in the VAT rate from 4 to 10 percent). Public expenditure fell by 8.9 percent, while investment expenditure fell by 24 percent. The increase in the effective rate, due to the rise in legal rates that came into effect in September, explains, together with the decrease in refunds, the increase in tax collection.

Excise Taxes

Finally, excise tax revenues decreased by 4.1 percent in 2012, approximately the same as in 2011. The biggest loss was recorded in the Hydrocarbon Tax, which fell by 7.5 percent (6.3 percent in 2011), due to the reduction in the consumption of gasoline and diesel. The decline in economic activity and the increase in prices (lower than in 2010 and 2011 but still above 8 percent) explain the lower consumption. The Tobacco Tax decreased by 2.6 percent, almost the same as in 2011 (2.3 percent). However, the composition of this fall is different: The decline in consumption has not been as sharp as in 2011 (10 percent compared to more than 17 percent in the previous year) and the increase in prices has been lower than then (7.5 percent compared to 13 percent in 2011). The Electricity Tax is the only figure that shows a significant increase (9.8 percent). Electricity consumption fell by 1.3 percent in 2012, so the increase in revenue is due exclusively to the increase in tariffs, accentuated in the latter part of the year by the execution of the rulings that required the price update for the end of 2011 and the beginning of 2012 to be reflected in the bills.