The Treasury’s ever-growing collection mirrors the persistent challenges faced by citizens trying to make ends meet in a tough economic climate. Inflation, which hits family budgets hardest, remains a major drag on household finances. By November, the Alicante region had paid 759 million euros more to the Tax Office than in the same period the previous year. Stronger employment, rising wages and pensions, and a rebound in corporate profits help explain this notable increase in revenues.
Public coffers in Alicante reached 4 billion 328 million euros in the first eleven months of 2022, marking a 21% rise from the prior year and outpacing the national growth rate by six percentage points. The latest Tax Office report confirms this trend, highlighting that Personal Income Tax (IRPF) contributed the largest share at 1,738 million euros, up 25% from the previous year.
This acceleration is closely tied to a higher employment base, with payroll withholdings forming the bulk of IRPF revenue. The Tax Office notes that salary and pension increases also feed the public purse, offsetting the cost of inflation and preserving tax intake even as prices climb.
Value Added Tax (VAT) collections rose by 15% to 1 billion 702 million euros in the first eleven months, a result closely aligned with the rise in personal incomes. While inflation has cooled somewhat, price pressures remain evident in the tax data and reflect broad price growth across goods and services.
company benefits
Corporate Tax delivered 587 million euros, up 28%, underscoring a positive trend in corporate profits. Yet this uptick was tempered by higher returns and the adverse effects of regulatory and administrative changes.
Antonio Pérez Rovira, chair of the Financial Commission of the Alicante Association of Economists, agrees with the Tax Office outlook and emphasizes a crucial point: households bear more tax pressure as inflation erodes purchasing power. He says that even when wages rise to offset higher prices, those increases push more workers into higher tax brackets.
Inflation and employment lift tax collection in the province by 17.6%
Pérez Rovira adds that the lack of updated IRPF brackets mitigates the effect of salary gains, reinforcing the need for targeted tax adjustments. He argues that updating this tax band would neutralize the impact of price changes and allow workers with higher wages to continue contributing without eroding their purchasing power.
He also points out that a potential VAT reduction on basic foods could lower Treasury revenues if implemented, and warns that its real impact will be visible in supermarkets and consumer prices.
The Generalitat’s revenue from Alicante increased by 22%
Alicante remains the leading province in funding the Generalitat’s coffers in terms of collections. Data from the Valencian Tax Office show Alicante contributing 1,037 million euros through November, up 35.9% from the previous period, compared with 849 in Valencia and 209 in Castellón.
This leadership largely reflects the buoyant home buying and selling market, where Real Estate Transfer Tax, including the real estate sector, rose 46% in the first nine months, reaching 708 million euros compared with the same period a year earlier.
The agency’s data also show that Documented Legal Transactions contributed 115 million euros, up 12%, while Inheritance Tax rose 14% to 87 million. Heritage taxes reached 52 million, up 23%.