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Broadening of tax bases. Indicator I of the Strategic Plan

The strategic objective of the Tax Agency is the improvement of voluntary compliance with tax obligations; To achieve this, it uses a combination of wide-ranging measures ranging from civic-tax education, information and assistance, prevention of tax and customs fraud, a posteriori control actions, the promotion of anti-fraud regulatory modifications, agreements with other organizations, cooperative relationships, etc.

In order to measure the evolution of the results of its actions in the medium term, the Tax Agency's Strategic Plan 2020-2023 established seven strategic indicators, the evolution of which until 2018 was included in the initial draft. The data initially reflected is updated annually, with the last update being dated December 31, 2021.

To measure the evolution of voluntary compliance, it might seem preferable to analyze the evolution of tax revenues; However, they are conditioned by a series of external variables (economic growth, evolution of internal demand, occupancy rate, inflation, regulatory changes, pace of returns, etc.) that make their use for the intended measurement –the evolution of voluntary compliance– is not sufficiently consistent.

Therefore, compared to tax revenues (which are nothing other than the amounts declared by taxpayers) there is another tax magnitude subject to fewer external variables and which therefore distorts the comparison less: the tax base.

The tax base is understood to be the amount of money (or of another nature) that serves as a reference to calculate the tax rate, that is, the amount on which the tax rate (percentage) is applied. If we add the tax bases of the different taxes and, in addition, correct the regulatory changes between one year and another – so that they are comparable – we obtain the aggregate tax base in homogeneous terms .

In order to evaluate whether tax compliance improves, we must compare the rates of variation of the aggregate tax base with appropriate macroeconomic magnitudes that bear the greatest possible relationship with tax revenues, such as nominal or GDP nominal domestic demand.

Thus, the Strategic Plan considers that the indicator that most reliably reflects how fiscal behavior evolves in our country is the one that compares the differential evolution of the aggregate tax bases with that of the reference macroeconomic magnitudes . This strategic indicator analyzes whether the percentage increase in aggregate tax bases is higher than that of nominal internal demand throughout the upward economic cycle.

It must be taken into account that the figures for both domestic demand and tax bases are subject to review for at least two years, which means assuming these estimates of the widening effect with a certain provisional nature.

On the other hand, we must always keep in mind that the evolution of this strategic indicator is conditioned by the economic cycle : For example, in the downward phases of the economic cycle (year 2020) some components of the bases (business profits, capital gains, capital income, nominal fuel consumption) react with more intensity than their equivalents in National Accounting, throughout which is added the distorting effect of the pandemic on the precision and quality of its estimates in 2020-2021.

With all the above details, it can be stated – and verified – that throughout the last six-year period (2016-2021) the aggregate tax base has been registering increases greater than those of nominal domestic demand, with an accumulated differential in the period of 11.8 points (notably the boost of almost five points in 2021), which has a positive effect on collection and allows us to infer an improvement in voluntary compliance in the period analyzed , which as stated at the beginning constitutes the strategic objective of the Tax Agency.

Evolution Chart 2016 - 2021 aggregate tax base vs nominal domestic demand