VAT collection grows by half in Catalonia due to gasoline and covid

VAT collection in the first quarter of the year grew by 21.

Thomas Osborne
Thomas Osborne
22 May 2022 Sunday 15:52
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VAT collection grows by half in Catalonia due to gasoline and covid

VAT collection in the first quarter of the year grew by 21.3% in Spain as a whole compared to 11% in Catalonia. This lower impulse of the tribute that taxes consumption does not seem to anticipate a priori a greater economic weakness in the Catalan community compared to the rest of Spain, according to the economists.

Sources from the Tax Agency were unable to identify any pattern that explains this pronounced difference between the two territories. On the other hand, from the Department of Economy of the Generalitat they justified it in certain external factors, especially in a worse relative behavior of some communities last year, which has allowed them this first quarter to show strong advances.

The first factor is that "most of the large fuel companies are domiciled in the Community of Madrid", which has driven the increase in collection. In the first three months of the year, in which fuels reached two euros per liter, VAT collection in Madrid increased by 22.7%.

Another reason that drives the communities in the center of the Peninsula is – as the Tax Agency also acknowledges – that in January 2021 they suffered from the Filomena storm, which caused the collapse of Madrid for a few days. That atmospheric phenomenon paralyzed the assembly for a few days last year.

The second major factor pointed out by the Generalitat is that in the first quarter of this year "the Balearic Islands and the Canary Islands, which were affected by the wave of covid" in 2021, had a better behavior this year. The Balearic Islands also suffered the effects of the aforementioned storm. All this led to less tourism in the first three months of 2021. On the islands, the increase in revenue in the first quarter of 2022 was 42.9% in the Balearic Islands and 39% in the Canary Islands.

The Department of Economy also cited that the collection in Ceuta and Melilla distorts the data since they act as "a mixed bag that also includes VAT on electronic commerce, which is on the rise." In these two autonomous cities, the collection grew exponentially.

The calculations of the Generalitat, counting all the factors mentioned and excluding the Basque Country and Navarra, which have their own tax regime, leave the VAT increase at 14.6%. However, this percentage is still higher than the 11% of Catalonia.

The director of the studies service of the Barcelona Chamber of Commerce, Joan Ramon Rovira, insists that "the explanation for the lower growth in VAT collection in Catalonia cannot be related to the expected evolution of VAT or consumption." As can be seen in the attached graph –prepared by the agency's study service–, there is a great correlation between the evolution of consumption and GDP with collection. If consumption or GDP rises, so does tax collection. Rovira clarifies that "the elasticity of VAT is higher and shows growth much higher than other variables". Rovira asks to analyze longer series to check if this difference between the behavior of Catalonia and Spain is maintained or it was only a specific quarter.


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