VAT increase helps reduce Spanish deficit

The Spanish government’s budget deficit was 25,774 million euros at the end of July 2010 which is 48.2% less than the same period in 2009.

The deficit which is equivalent to 2.44% of Spain’s GDP is a result of less spending (103,673 million euros – 3.8% less) and more money coming in (77,899 million 34.4% more). Government accounts show that the budget deficit stood at 30,142 million euros at the end of July compared to 61,529 million euros for the same month last year.

Money collected from VAT accounted for 92.1% of the total amount of money received into government accounts (104.166 million euros) – 10.4% more. Moreover VAT returns rose strongly and have now risen for five consecutive months and are for 14% higher than last year.

Direct tax generated 50,885 million euros for the state which is 3.3% more than for the same period last year. Money collected from income tax generated 41,856 million euros which is 5.3% more than last year thanks to the 400 universal tax rebate being scrapped except for those on low incomes and the rise from 18% to 19% of tax on capital income.

On the other hand money received through tax on associations fell by 9.8% during the first seven months of this year bringing in a total of 6,247 million euros.
Money received from other tax sources rose by 5.7% to 11.471 million euros. The rise in tax on tobacco meant the government received 7.9% more from this source and also the rise in tax on fuel led to an increase of 4.4% from this source.

Government investment fell by 4.9% due largely to the cuts in the defence budget although civil investment grew by 2.1%.