The increase in card payments brings out 6,000 million a year in the underground economy through VAT

Daniel Viaña Madrid

Madrid

Updated Thursday, March 21, 2024-02:01

The coronavirus pandemic accelerated and exacerbated a very relevant change in habits: that of paying for daily purchases using bank cards.

And that, in turn, brought to light a very important part of the underground economy that exists in Spain.

This is something that is widely accepted, but the director of the EsadeEcPol tax forum and Treasury inspector, Francisco de la Torre, has gone even further and has put figures to this phenomenon:

6,000 million euros more per year in collection alone for VAT

.

The former deputy for C's also signs the document

. Did tax fraud and the underground economy reduce after the pandemic?

Analysis 2019-23 based on VAT collection

, a work that is published this Thursday and in which it first explains that "in 2020, the drop in collection exceeded the drop in GDP, with a probable growth of the underground economy simultaneous with the decrease in economic activity.

"In contrast," he continues, "the growth in tax collection between 2021 and 2023 exceeded forecasts, standing above pre-pandemic levels," and adds that "the percentage of household consumption that pays VAT grew between six and seven points without significant variations in the regulations, something that can only be explained by outcropping.

"This increase in the bases subject to control led to

an increase in VAT collection of around 6,000 million

euros annually in both 2022 and 2023," he certifies.

De la Torre crosses these figures with the "hypothesis that during the pandemic there would have been social changes that led to an increase in card payments, decreasing the percentage of cash transactions,

which are not equally controlled by the Tax Agency

."

And to confirm this point, he goes to the Bank of Spain data on small transactions for that same period 2019-2022, distinguishing between card sales payments and cash withdrawals at ATMs.

"Indeed, we observed that the percentage of consumption paid by credit card increased significantly, which is subject to greater control than cash," the document certifies, adding that "additionally, cash withdrawals barely grew in the same period, despite inflation.

Tax residuals

The document also explains the "

positive tax residuals

" to which the governor of the Bank of Spain, Pablo Hernández de Cos, referred, and for which "the collection has been systematically beating the forecasts" in that same period 2021-2023.

"There are fundamentally two reasons that explain the positive tax residuals," explains the Esade text.

"On the one hand, the effect of inflation on the collection of Personal Income Tax, what is known as cold progressivity, is probably under-calculated."

The other is precisely "the reduction of the underground economy, due, among other reasons, to the greater use of electronic media, which leave traces, and the corresponding reduction in cash."