Until July, the state deficit stood at 37,682 million euros, reflecting an increase of 56.8 percent from the same period last year, which stood at 24,027 million. The deficit now equals 2.68 percent of GDP, up sharply from 1.81 percent in July 2022.
As described by the Treasury, the deficit rose to 2.68 percent of GDP in July, marking a 0.87 percentage point increase. This surge is linked to the final payments of the 2021 financing system in favor of autonomous communities and local administrations, totaling 11,798 million versus 6,106 million in the prior year and compared with the state’s share in the same period.
Therefore, after deducting the detailed results of the final settlements and accounting for the recording of personal income tax in national accounts and the expense items covering negative balances, the state deficit in July would be 5.9 percent lower than in the same month of 2022, according to treasury calculations.
The joint deficit of the Central Government, Social Security, and autonomous communities, excluding financial aid, reached 30,186 million euros through June. This represents a 5.1 percent reduction from the previous year and amounts to 2.14 percent of GDP, compared with 2.40 percent in the same period in 2022.
When including the balance of aid to financial institutions, the budget deficit narrows to 2.17 percent of GDP, according to data from the Ministry of Finance and Public Services released on Monday.
Specifically, the Central Government’s deficit stood at 21,203 million at the end of June 2023, representing 1.51 percent of GDP, down from 1.82 percent in the prior year. Meanwhile, autonomous communities posted a deficit of 12,110 million, equal to 0.86 percent of GDP, compared with 0.65 percent in the same period of the previous year.
Finally, Social Security Funds posted a surplus of 3,127 million through June 2023, up from 971 million a year earlier. In terms of GDP, the Social Security Funds surplus is 0.22 percent of GDP, higher than the 0.07 percent recorded in 2022.
State tax revenue increased by 0.9%
Turning back to the deficit, the trend through July shows non-financial resources, known as income, at 142,890 million. This is 3.6 percent lower than in the same period in 2022. Among these, taxes reached 116,288 million, accounting for 81.4 percent of total resources, with a modest growth of 0.9 percent compared to July 2022.
Production and import taxes rose by 1.4 percent, reaching 69,127 million, with 52,080 million of this from VAT, a figure 0.8 percent lower than in 2022.
New tax measures for 2023 included the Special Tax on Non-Reusable Plastic Packaging totaling 345 million, a temporary energy tax of 753 million, and a temporary tax on credit institutions and financial entities amounting to 587 million, all contributing to a total of 1,685 million.
The company’s revenue increased by almost 14%
In terms of current taxes on income and wealth, the total reached 47,028 million, which is 0.4 percent higher than the first seven months of 2022. This was driven by a 13.3 percent rise in Corporate Tax to 12,422 million, aided by an increase in the first installment collection.
Personal income tax declined by 6.8 percent to 31,649 million, while Non-Resident Income Tax rose to 2,128 million, up 28.8 percent. Taxes on capital amounted to 133 million euros, and revenues from social contributions fell by 2.2 percent.
Expense increase
In expenditures through July, non-financial state activities totaled 180,572 million, up 4.8 percent from the first seven months of 2022.
The largest expenditure item was transfers between public administrations, accounting for 64.2 percent of total non-financial activity. In the first seven months of the year, these transfers reached 115,842 million, up 8 percent from the previous year. A major factor behind this rise was an additional provision of 1,666 million allocated to autonomous communities and local entities to offset the negative overall balance from the budget liquidation of 2020.
Next, employee wages rose by 3.7 percent. The 2.5 percent increase in public salaries contributed to a total of 12,080 million in this category.