By Guest Writer • 01 December 2022 • 12:03
PM Sánchez with Minister Montero following 2023 Budget approval
Credit: La Moncloa flickr
In essence, prudent fiscal policy should see a country earn more than it spends on an annual basis, but this has been a real problem for successive Spanish Governments since the 2008 economic crisis.
Clearly the pandemic didn’t help the current position as so much money was spent on supporting business and families in need but since 2021, Spain has seen a downwards turn as industry started to recover after strict lockdown and isolation rules were relaxed.
According to Minister of Finance Maria Jesus Montero, in October 2021, the deficit stood at 4.93 per cent of Gross Domestic Product (GDP) and totalled €59.468 billion but at the end of October 2022 this had dropped by a significant 69.7 per cent to a much healthier €18.016 billion, equivalent to 1.37 per cent of GDP.
This has mainly been achieved by a combination of a 25 per cent increase in sales of non-financial products and a much smaller growth in expenditure of just under 2 per cent.
Tax collections on both production and imports have helped considerably with VAT collections rising by 18 per cent in the period under review and Income Tax for both residents and non-residents shooting up with tax on dividends making a big contribution.
As companies earn more, so they pay more and the sale of shares and other assets has added to the amount of Capital Gains Tax being collected as well.
The payments to Spain from the European Recovery Fund have also helped the country to invest for the future.
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