MADRID, 25 Oct. (EUROPA PRESS) -

The price increases that are taking place in the year 2022 would have increased tax collection from January to August by 7,011 million, so around five points of the total growth in tax revenue (19%) recorded in that period can attributed to the impact of prices, that is, 26% of the total.

According to the report of the Tax Agency advanced this Tuesday by 'El País' and to which Europa Press has had access, the collection between January and August 2022 reached a total of 168,796 million euros, 19% more than the same period of the previous year. Of this total increase, 7,011 million euros are due to the effect of the rise in prices. Without this impact, the collection would be 161,785 million, which would mean 14% more than in 2021.

The greatest reflection of the effect of inflation on the tax evolution is observed in the Value Added Tax (VAT), which registered an increase of 4,019 million euros due to the increase in prices, more than half of the total increase registered in the period (7,011 million). In total, 58,414 million were collected from this tax, 20.1% more than in the first eight months of 2021.

Of the total variation in the collection of each tax, the Tax Agency has isolated in its report the part due to the 'price rise' effect from all other sources of variation. For this, except in the case of withholdings on income from work, a deflator has been used according to the nature of the tax and it has been estimated in each case what the income would have been in a "normal" situation of price increases, considering as such is the average increase of each deflator in the 2017-2019 triennium.

In the Personal Income Tax (IRPF), the impact of inflation on wages would have increased its collection between January and August, compared to the same period last year, by 2,392 million euros. Within this tax, the largest increase is registered in 'Withholdings on income from work', with 2,256 million more, of which 1,189 million correspond to large companies. In total, revenue from this tax would have amounted to 75,301 million euros, 16.7% more.

In the case of Corporation Tax, the increase in collection due to price increases would have been 250 million euros, while for the tax on foreign traffic, collection amounted to 348 million euros. In other taxes, such as special taxes or the Income Tax for Non-Residents, the increase in collection due to the rise in prices was nil, according to data from the Tax Agency.

From the Treasury they point out, however, that any estimate of the impact of inflation on income is subject to a high degree of discretion. In the case of direct taxes, there are purely conceptual problems, such as whether the impact of inflation is detected in the tax bases or only in the effective rates.

If what is sought is simply to find a collection in constant terms, the solution is not unique either, because it involves deflating nominal variables in which it is not well defined what is the volume and what is the price. In this sense, the Treasury recalls that the National Accounts itself does not deflate the magnitudes linked to direct taxes.

But the measurement problem is not limited to direct taxes. In indirect prices, consumer prices (the CPI) are usually taken as a reference, but these prices are only suitable for VAT and with certain limitations.

Another controversial issue, according to the Tax Agency, is the decision as to whether what is intended is to eliminate all the effect of the price increase (that is, whether the actual collection should be compared to a situation in which the prices had not changed), or only that part that remains above what would be considered the normal evolution or trend of prices (that is, eliminate the effect on income of the excess of inflation that is observed with respect to a historical average or of a reference value such as, for example, 2%). In this report, he has opted for this second possibility with some nuances.

In addition to these issues, one more aspect must be taken into account that is linked to the collection mechanics: some of the income corresponds to liquidations generated in much earlier periods and, therefore, unrelated to the inflationary process of the current year. This is the case of the result of the annual personal income tax or corporate tax declaration, or of the settlements for actions by the Administration (minutes, income from deferrals from previous periods).

But also in other situations there are gaps that affect the relationship between income and inflation. For example, the uptick in inflation in one year is not reflected in salaries or pensions in that same year, but is carried over to the subsequent year.

In addition, given that the accruals for December and the fourth quarter are paid in January, a significant part of the income for the first months of the year will not be affected by the rise in inflation that year, according to the Tax Agency.