Treasury leaves 6,000 million margin in the Budget for the tax reduction of electricity in 2022

It is in this difference between the forecast of nominal growth of the economy and the increase in tax revenues, which would normally be measured, where the margin is hidden that, according to official sources, the Government reserves to continue cushioning the rise in electricity.

It is about five tenths of GDP, almost 6,000 million, with which the Executive would comfortably cover at least another half year of palliative measures after having lowered the price of electricity from 21% to 10%; reduced from 5.1% to 0.51% the Special Tax on electricity and suspended the tax on electricity production from 7%.

If these measures are not extended, therefore, the revenue and deficit forecasts could improve by that half a point of GDP, although the evolution of the price of the megawatt leaves little room for hope.

From there, Montero trusts that “the improvement in the economy will allow an increase in all fiscal figures in a general way.” Personal income tax, which this year grows 6.6%, would leave 6.7% more in 2022 to 100,132 million. VAT, supported by an advance in private consumption of 6.9%, will contribute 75,651 million next year, 9.5% more (after growing 9.1% this year). Special taxes would advance by 8.2% (after 7.4% in 2021) to 21,843 million.

The great tax novelty occurs in Societies, which this year will collect 38% more than in the worst of the pandemic, and will continue to increase its income by 11.8% in 2022 to 23,477 million. The figure includes the 400 million euros that the Treasury estimates that it will be possible to collect by promoting a minimum rate of 15% on the tax base for consolidated groups and companies that invoice more than 20 million per year. Although the vast majority of Spanish companies already pay above said threshold, around 21.5% on average according to data from the Tax Agency, Montero estimated that 1,070 firms will pay more taxes with the minimum rate. They are those that, starting from the nominal rate of 25% (30% for banks and oil companies) applying deductions and tax benefits end up paying less than 15% of their tax base (and that this amounted in 2019 to only a quarter of the profit of the groups). Of course, knowledgeable sources of the fine print assume that the affected companies will be able to reserve tax credits for past losses that they cannot end up enjoying for the minimum rate for subsequent years.

The measure, which the first Government of Pedro Sánchez already tried to promote in 2019, then formed part of the coalition pact with United We Can and was put on hold due to the pandemic, is now being resumed due to the pressures of the purple formation in the negotiation of the budget plan. Montero, however, framed it in the international agreement of 130 OECD countries to promote a global rate of 15% for multinationals. Although the agreement will mean the abolition of national digital taxes, the minister said that “it is too early” to know when Spain will have to cancel its Google rate, pending the completion of the pact and the European directive that develops it. Given the low collection that this tax and the Tobin tax are reaping, of course, Montero admitted that they will lower the collection forecasts for 2022 to adapt them to the real settlement of 2021.

The minister clarified, in any case, that the great fiscal reform that she plans will be undertaken once the report commissioned is known to a committee of experts that will publish it in February.

For now, and in the absence of parliamentary processing of the accounts, there will therefore be no fiscal equalization of diesel to gasoline, or new changes in VAT rates. The trump card for the negotiation, it is suggested, could be to accept amendments to continue delaying the remodeling of the registration tax, which is more taxing on polluting vehicles, currently paralyzed until the end of the year.

However, Montero guaranteed that the Budget “does not imply an increase in the public deficit.” His forecast is to reduce it from 11% to 8.4% this year, to 5% in 2022, 4% in 2023 and 3% in 2024. The debt, in turn, would fall from 120% to 119.5% this year and to 115.1% in 2022, estimates Montero.

In turn, the cost of the public debt issued by the Treasury would be 30,175 million euros next year, which represents a reduction of 4.7% compared to the 31,713 million that it will bear this year, announced the Treasury, for the double effect of a decrease in outstanding liabilities and a reduction in the deficit.

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