If taxes are a thermometer for measuring economic activity, Alicante has long exhibited steady progress, even as momentum slightly cools. Employment growth, rising wages, and pension increases are broadening the tax base, with personal income tax and value added tax showing resilience. Regional taxes, notably the Property Transfer Tax paid on the purchase and sale of existing homes, reflect more modest gains amid the slower growth pace.
In the first quarter, residents of Alicante contributed up to 1,316 million euros to the central government and the Generalitat. This total, representing the various duties collected by these authorities, rose by 12% from the same quarter in 2022. It marks meaningful growth, yet it remains short of last year’s peak.
The regional tax picture stands out for its momentum. The Valencia Tax Office reported that income in the province climbed by at least 30.9% in the first three months of 2023, driven by strength in real estate and higher inheritance activity, though the quarterly increase moderated to 5.4%, totaling 224 million euros.
Among the regional taxes, Patrimonial Transmissions Tax, which applies to real estate transactions, remained a primary income source for Alicante. It reached 156 million euros, up 8.9% year over year, while the overall pace of growth for 2022 already suggested a strong trend in this sector.
Tax collection that is less documented and adjusted—such as certain legal actions—dipped by 7% in the quarter, compared with an 11% rise a year earlier, amounting to 28.3 million euros. Inheritance Tax, which rose during the pandemic, showed a sharper reversal, with revenue falling 18.3% after an earlier 12.9% year-over-year increase.
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Looking at the broader regional tax administration handled by Sonia Diaz, the largest increases came from taxes tied to face-to-face gambling. The easing of pandemic-era social restrictions left a mark in the first quarter of the previous year, yet the sector continued to grow. Revenue from casinos rose to 1.7 million, while bingo climbed 35% to 2.1 million. The development of tax in this area remained moderate, and the number of slot machines rose by 3.2%, totaling 9.7 million in revenue.
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On the national front, tax collections reflected slower growth in the face of softer macroeconomic conditions, even with a still-strong labor market and pension increases. The Tax Administration reported 1,092 million euros in the province for the first quarter, up 13.9% from the same period last year, a growth rate six percentage points lower than the 19% rise that closed 2022.
Personal income tax stood out with the strongest performance, yielding 451 million euros in revenue, up 16.3%. The monthly collection report notes that the core driver is payroll and pension withholdings, boosted by higher employment and a 27,000-increase in workers over the year, along with wage growth and pension adjustments. Non-resident income tax, applying to earnings or assets of non-residents in Spain, also rose robustly by 15% to 33.7 million euros.
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In contrast, VAT collection grew more slowly in the opening months, totaling 540.7 million euros, only a 6.3% rise from the prior year. This slower pace reflects softer consumer spending, though demand remains positive. The VAT on imports dropped by 11%, signaling tighter local supply as job prospects wavered. Corporate income taxes reached 19.4 million, external traffic about 20.3 million (up 5.3%), and Special Consumption Taxes 9.2 million, up 5.1%.