Research Dept. News
|
|
|
|
Monthly Report, num 290 - April 2006
|
|
|
Spain: overall analysis - Public sector
|
|
|
|
|
Economic boom and inflation put government accounts on track in 2005
|
|
Economic boom favours sharp rise in tax collections…
|
|
General government ended the 2005 budget year with a surplus of 1.1% of the gross domestic product (GDP), a result the economic authorities hastened to point out as the first surplus since the Seventies. In fact, this announcement had been made in previous years but later reviews of the figures had corrected the initial estimates downward.
|
|
|
|
By administration, as in previous years, Social Security again presented a notable surplus, although this time accompanied by a central government surplus. On the other hand, the autonomous communities and local government showed negative balances worse than the year before.
|
|
|
|
|
The favourable result of the balance for general government as a whole was due to the extraordinary growth of revenues, particularly tax collections which, according to the Ministry of Finance rose by 14.1%, nearly five points above growth of domestic demand. In the case of spending, the few figures available, covering only the central government segment, point to upward deviations except in the area of interest on the government debt.
|
|
|
|
The rise in revenues of general government was across the board in the various tax headings. Strong job creation and giving foreign workers legal working status raised collections for Social Security while this also had an important effect on collections for personal income tax. The good state of business in general gave a decided boost to collections for corporation tax.
|
|
|
|
|
At the same time, rises on the stock market and the continued strength of the real-estate market also had an effect on taxation for capital gains under income headings. Overall, direct taxation moved up a rate of 17.7% while Social Security contributions (according to provisional figures) were up 7.8%.
|
|
|
…which has positive effect on balance of government accounts.
|
|
In the matter of indirect taxes, the sharp increase in domestic demand, along with the growth of imports, was decisive. Furthermore, the high inflation rate, in general, and the rise in oil prices and fuel costs in particular brought about a substantial increase in revenues obtained by the public purse, mainly through the value added tax (VAT) for which collections were up 12.1%. In addition, the increase in amounts coming from foreign trade as 18.6%.
|
|
|
|
The outstanding balance of the public debt of all general government stood at 392.8 billion euros at the end of 2005, that is to say, 43.4% of the GDP, two points and two decimals less than in the year before. Of this proportion, 6.2% were for autonomous communities and municipalities and the rest (37.2 points) corresponded to the central government, including Social Security. In any case, the level of debt of Spain’s general government is substantially lower than the average for the euro area at 72% in 2005.
|
|
|
You can susbcribe now to be nofified by email every time the Monthly Report is updated in the internet.
|
All documents are in Adobe Acrobat format (PDF).
To view a document in PDF format you need the Adobe Acrobat Reader. If you don’t have it already loaded on your computer, you can donwload it now.
|
|
Direct link to the Research Dept. in your mobile
We'll send you a free SMS with the link
|
