• The collection in IRPF touches the record of 100,000 million thanks to the working middle class and pensions

The public deficit closed 2022 at 4.8% of the Gross Domestic Product (GDP), a budget hole of about 57,600 million euros that improves the one that the Government had planned in its General State Budgets for this year, of 5%, thanks mainly to the historical increase in tax collection.

As announced on Thursday by the Minister of Finance, María Jesús Montero, the State's tax revenues increased in 2022 by 14.4% year-on-year, which means that the contribution of Spanish companies and citizens to the Tax Agency increased by 14.4% compared to 2021, but stressed thatonly five points of this increase are due to the effect of inflation on taxes such as VAT or Personal Income Tax.

"There is a tendency on the right to talk about the improvement in income being directly due to inflation, but the reality is that the increase in public revenues is due to the improvement in employment, the increase in business profits and the increase in consumption," said Montero, who has accused of "falsehood" those who accuse the State of enriching itself thanks to the rise in prices.

Inflation has an effect on revenue, since when consumer prices rise, VAT is applied on higher prices and is higher and salary increases motivated by the increase in prices causes increases in nominal incomes that translate into an increase in the contribution via Personal Income Tax, what is known as 'cold progressivity'.

"All taxes have registered a positive behavior," Montero explained. Specifically, personal income tax experienced an increase in income of 15.8% "because there are more jobs and better wages"; corporate tax collection increased by 20.8%, and VAT collected 13.8% more. "It is a lower rise than that of the IRPF or the IS, which are less affected than VAT by inflation," he defended. Special Taxes contributed 2.5% more, a moderate increase due to the tax cuts approved by the Executive.

The breakdown of the deficit

Of the total deficit recorded by the Government of Spain, the bulk came from the Central State Administration, which registered a gap between income and expenditure of 3.1% of GDP, partly because it assumed important transfers to Social Security. The Autonomous Communities had a deficit of 1.14%, equivalent to about 15,085 million euros, which would have been higher if the State had not transferred 7,500 million euros extraordinary, according to the minister.

The Local Corporations -municipalities, councils, councils ...- had a deficit of 0.1% of GDP, a negative balance that is not usual in the sector and that is due to the fact that "in terms of national accounts the municipalities have had a return obligation that is recorded in their accounts in 2022, but the State will transfer that money over three years to compensate for that negative deficit in the successive years ", said Montero, who has described it as "a purely accounting mismatch."

Social Security, for its part, has had a budget gap of 5,986 million euros, 0.5% of GDP, half of that registered in other years. The improvement is due, on the one hand, to the increase in income from social contributions due to the improvement in employment and the increase in wages and, above all, to the largest transfer received from the State, of 18,396 million euros.

Montero celebrated that "for the third consecutive year, Spain managed to meet its commitments" and that, since 2020, when the deficit shot up to 10.1% of GDP, it has been reduced by more than five points. "It is the largest deficit reduction in our history without including financial aid, with an improvement of almost 49,500 million in two years," he boasted.

This reduction in the deficit, according to the minister, is due "to the policies of the Executive and the improvement of public revenues derived from activity and job creation." "We are a credible country in the eyes of the European Union and the world and that is an important value for investment and the credibility of the Executive based on the reforms committed to Brussels. We are guided by prudence," he said.

According to The Trust Project criteria

Learn more

  • GDP
  • Personal Income Tax
  • Maria Jesus Montero
  • European Union
  • Social security
  • Government of Spain
  • Tax Agency
  • General State Budget
  • Taxation
  • Public deficit