Benefits
Alicante’s tax receipts are not the ones seen last year when inflation and the end of the pandemic pushed totals up by nearly 20 percent. The Tax Administration shows growth across a large share of the province, even as activity in some sectors—especially industry—begins to temper after a period of rapid expansion.
Recent official data point to stronger public utility revenue in Alicante, reaching 2.903 million euros up to July, a 10.3% rise from the same period in 2022 when the province posted a record absolute collection. This growth outpaces the national trend, where total collections rose by 3.9% in the same window, and it is also ahead of the autonomous region’s 9.6% increase.
The main driver behind this evolution appears to be the Personal Income Tax (IRPF), which contributed roughly 1.283 billion euros, an increase of about 11%. Much of these funds come from withholdings on payrolls, pensions, and payments to self-employed workers. The total withholdings reach 908 million euros, up 12.2%, reflecting a larger employed population, rising salaries, and, notably, pensions that benefited from a strong revaluation at the start of the year. In short, a resilient labor market continues to buttress public revenues.
Further, the rise in income tax also aligns with the annual declaration process. Since this year, the number of taxpayers has increased by more than 15% in positive terms, far outpacing the growth in returns and underscoring broader economic activity.
Another key area: the benefits
Beyond personal income tax, this category led the gains in the early part of the year. Corporate tax, which targets business profits, shows a robust performance. Companies situated in the region paid nearly 192 million euros during the first seven months, a 60% jump from the same period last year. These figures reflect improving results helped by the economic rebound over the past two years. While some firms faced tighter margins, many benefited from strategies that leverage inflation to improve profitability.
By contrast, the VAT component remained more restrained during this period. Tax Office data show a total collection of 1.245 billion euros, just 4.4% higher than in 2022. The slower growth compared to income and corporate taxes has several explanations. A notable factor is an 11% decline in VAT collections on imports, suggesting that local companies reduced purchases from abroad in anticipation of weaker activity and to secure future supplies.
Overall, the regional fiscal picture presents a mix of strength in earnings and caution in expenditure channels. While some sectors show resilience, others are signaling caution as inflation normalizes and international demand adjusts. Yet the data consistently point to the tax system maintaining ample capacity to fund public services and social supports as the economy recalibrates post-pandemic.
Additionally, reductions in certain tax components at the regional level have trimmed overall revenues. The regional income tax cuts, approved in several autonomous budgets, have decreased collections by about 1.677 million so far this year. In contrast, the savings from a value-added tax reduction on basic foods amount to around 963 million, a figure that underscores the ongoing tension between fiscal policy aims and revenue needs. These changes appear to reflect political timing and broader fiscal strategies rather than a simple trend in consumption or inflation alone.
Households in Alicante thus face a fiscal landscape where personal income tax remains a central pillar of public revenue, while VAT and corporate taxes pose more nuanced trajectories. The continued monitoring of these indicators will reveal how the province balances growth, inflation, and public expenditure in the months ahead.