The Fiscal Authority (Airef) has raised the public deficit estimate for 2023 by almost one point, to 4.2% of GDP. The decision to approve new spending measures to reduce inflation, such as the reduction of VAT on food, free or subsidized public transport and the 200 euro check, as well as the extension of others, has that the independent body worsens by nine tenths the forecast set in October, which was 3.3%. The Government maintains its reference rate at 3.9%. The stability pact remains suspended, so that, should the scenario of the tax authority take place on December 31, the tax rules would not be breached.
Airef calculates, in its report on the initial budgets of public administrations for 2023, released yesterday, that the anti-inflation measures decree that was approved at the end of last year will have a budget impact of more than 14,000 million in 2023. Specifically, the decrease in collection due to tax measures will be 6,083 million, and the spending measures, which are essentially aid to different groups, will have a cost of 7,931 million, explained yesterday Ignacio Fernández-Huertas, responsible of the budget analysis division of the supervisor of public finances. The Government set at 22,000 million the cost during the last year of the aid to fight against the increase in prices.
The document also warns of a worsening of the balance of the autonomous communities due, mainly, to the increase in spending in the pre-electoral period. In this sense, Catalonia will be one of the four regions that will close in 2023 with a deficit of more than 0.3% of GDP, Airef said. In this group there will also be the Valencian Community, Murcia and Castilla-La Mancha. The rest of the regions will reach 2024 with a budget gap close to balance or with a surplus. The institution will specify this in another report next week.
The Fiscal Authority reviewed the collection forecast for the new taxes that came into effect on January 1. The organization considers that the changes introduced at the last minute in the parliamentary procedure will cause a decrease of 977 million in the estimated annual income. Specifically, the levies on banks, energy and large fortunes will generate 3,302 million in public coffers, compared to the 4,279 expected by Airef himself when they were presented. Treasury made a global calculation of 5,000 million.
The tax that will suffer the biggest cut in its collection, according to the supervisor's estimates, will be the solidarity levy on the great fortunes. The Airef forecast, after analyzing the Budget Plan, was 1,270 million in revenue. But he has cut it in half, to 635 million. The explanation he offers is that, after the amendments approved by Congress, it was established that the joint share of personal income tax, wealth tax and new levy does not exceed 60% of the taxable bases of personal income tax. If it is exceeded, the liquidation of the tax on large fortunes will be reduced by up to 80%. The authority explains in its report that this situation "results in a reduction of the impact [of the tax] that the Government figures at 50%".
Bank and energy levies, for their part, would go from an initial collection calculated by Airef of 3,500 (the same as the Government) to 2,908 million. A reduction of 592 million motivated by "the availability of the first results". After the first installment of the two tax figures, already appealed before the courts, was settled in February, the independent authority concludes that the first payments "were slightly below the initial forecast".
The organization chaired by Cristina Herrero also announced yesterday that it maintains the economic growth estimate at 1.6% of GDP, despite the improvement of some indicators, such as the labor market or revenue. "The activity is behaving more strongly than we expected in the autumn", admitted Esther Gordo, director of the economic analysis division. However, these developments are not enough to revise growth upwards due to the risks inherent in monetary policy. For Airef, the tightening of financing conditions will offset the positive evolution of other factors.
Airef recommended that the Executive come up with a "realistic and credible mid-term fiscal strategy that guarantees the sustainability of public finances" as soon as possible. The debate on public spending and future fiscal rules remains open.
