Public administrations posted a deficit of 1.54% of GDP through September, totaling 22,448 million euros, a 0.9% decrease from the same period last year, according to the Treasury. When aid to financial institutions is included, the public deficit stands at 1.56% of GDP.
By October, the state deficit alone reached 20,053 million euros, equivalent to 1.37% of GDP, down from 1.58% in the prior year. It represents a 5.7% decrease from the same period last year.
Nevertheless, the Ministry explained that the deficit contraction was significantly influenced by the final liquidation of the financing system for the Autonomous Communities and Local Entities, finalized in July 2023 for the 2021 fiscal year, with the state deficit expected to rise by 11,798 million as a result.
By October, the state’s non-financial revenue totaled 222,917 million euros, up 0.4% compared with the same period in 2022.
Tax collection increased by 3.1%
Taxes accounted for 186,454 million euros, or 83.6% of total resources, marking a 3.1% rise versus October 2022. Production and import taxes grew by 2.2%.
Among non-financial resources, 2023 tax developments highlight new items such as the Special Tax on Non-Reusable Plastic Containers, Temporary Energy Tax, Provisional Tax on Credit Institutions, and the Provisional Tax on Non-Reusable Plastic Containers, along with solidary wealth measures that enabled joint collections of 3,934 million by October.
Current income and wealth taxes reached 87,659 million, rising 4.2% from the first ten months of 2022, while Corporate Tax revenue climbed 7.9% to 39,009 million.
The Ministry noted that this rise stems mainly from higher installment collections and an 11.8% increase in income from the annual declaration.
Personal income tax fell 3.6% versus 2022, totaling 43,401 million, while Non-Resident Income Tax reached 2,911 million, up 18.7%.
Government spending fell 0.2%
By October, non-financial state expenditures stood at 242,970 million, 0.2% below the figure for the first ten months of 2022. Transfers between public administrations remain the largest expenditure item, accounting for 62.2% of total non-financial operations.
Specifically, in the first ten months of the year these transfers totaled 151,076 million, up 2% from the previous year, driven by an additional provision of 1,666 million allocated to Autonomous Communities and Local Entities to offset the negative general balance of 2020.
Regional Administration received 86,172 million, with 75,417 million of the total transfers covering the financing system, up 10.9% from 2022. Of this, 67,080 million correspond to payments from the account, while the remainder reflects the impact on the final settlement expense for 2021.
In contrast, the Social Security System spent 2,639 million less than in 2022, totaling 31,440 million, mainly due to transfers linked to the Toledo Pact.
Local Government received 21,213 million, up 2,407 million from last year. Of this, 18,746 million were transfers related to state revenue participation, a 5.8% year-over-year increase. The remaining amount reflects payments from the account and the impact on the 2021 final settlement expense.
Employee wages rose 4.3% to 16,971 million euros, with October salaries including a 0.5% increment foreseen in the 2023 General Budget Law.
Public deficit breakdown
Analyzing the deficit distribution through September, the Central Government showed a deficit of 23,211 million euros, equal to 1.59% of GDP, while autonomous communities registered a deficit of 509 million euros or 0.03% of GDP, a 0.46% increase from the prior year.
The gap in communities was driven by a 2.2% rise in expenses, with revenues up 5.8%. Taxes climbed 15.4% to 66,257 million euros.
Social Security Funds posted a surplus of 1,272 million through September 2023, compared with a 1,371 million deficit in the same period of 2022. In GDP terms, the Social Security surplus equals 0.09%, which is 0.10 percentage points higher than the previous year.
A 10.1% revenue increase is evident, underpinned by a strong 9.9% rise in contributions and greater efficiency in collections relative to expenses, which grew at 9.2%.