An increase of 845,8 million euros in the volume of tax refunds has contributed decisively to tax revenue obtained up to August had shown a break of 0.6%, one of the main risk factors to the fulfilment of the budget targets set by the Government.
according To the data of the budget execution until August released this Monday by the Ministry of Finance, the public deficit in the first eight months of this year was 3990 million euros. This number represents a decline of 911,1 million euros in comparison with the value that had been achieved until July, however, the variation compared to the same period last year, has now become less favourable. While until the end of August, the deficit is 81 million euros lower than the one verified in the same period of 2015, to July the decrease against the same period was much higher 542,8 million euros.
One of the causes for this slowdown in the pace of deficit reduction is in the evolution of the tax revenue. In total central government tax revenue, which grew by 1.6% up to July, started to register until August at break of 0.6%, pulling away even more of the goal set in the State Budget for the whole year. The total revenue effective went from a growth of 2.6% until July for only 0.9% up to August.
If the scenario of lower economic growth than anticipated this year was already a factor in the press the evolution of revenues, in August the thing that stood out was the evolution of the repayments of the main taxes. According to the data of Finance, however, has until August to a rise of this indicator 845,8 million euros compared to the same period last year, when in July there was an increase of 549,1 million euros. The IRS, with an increase of repayments of 344,3 million euros, the IRC, with 180,2 million, and the VAT with 325,6 million, outstanding.
The Finance point out that, at the level of the tax revenue, the values obtained represent a "stabilization" compared to the previous year, ensuring that "the evolution of revenues is in line with the projections for the whole year".
The idea behind this optimism is in large measure related to the refunds. The logic is that, when approaching the end of the year, will progressively reduce the weight that the impact of the rise of the refunds have in the total revenue, being able to watch some taxes important to an approximation to the goals set in the state budget. This will depend, however, how they will behave in the economy and employment at the end of the year and the impact that this will have on the ability of the State to levy taxes.
Spending slow down
If on the revenue side, the accounts that have fallen away in August even more of what is planned, the level of spending continues to be more positive developments than the one that was established as a goal in the OE. The expenditure actual total of the Central Administration and Social Security went from a growth of 1.5% up to July to 1.3% up to August.
The Finance highlighted that the level of spending, if "maintained a growth rate lower than foreseen in the Budget of the State", reminding the results obtained in two main areas: "the rationalisation of intermediate consumption and the wage policy, and public employment".
In respect of the expenditure for intermediate consumption, recorded in the first eight months of 2016, a reduction, compared to the same period of the year, of 2%, when the OE is expected to rise 1.7%.
At the level of personnel expenditure, the positive results are not as crisp and clear. If on one hand the amount of the compensation for certain permanent and is growing less than expected (2.3% compared to 4.3% of OE), on the other, the total of personnel expenses (which include also the expenses with the social security of workers in the State) increased by 3.2%, more than the 2.4% predicted in the state budget.
it Will be moreover, at the level of the expenses with personnel who will play a decisive part in the final result of the deficit. In the last months of the year, this item will be pressed by the fact that they continue to be done the reset process progressive pay cuts in the public service. Even so, from the side of the Executive there is the confidence that, in terms of annual variation, will be felt in the last quarter, a positive effect stemming from the fact that, at the end of 2015, if you have registered incorporation significant staff in the health sector. In addition, the Government has stressed the contention in the entries of new employees who have been registering for this year.
These data presented this Monday are accounted for in an optical box, in which what counts is the input and the output actual cash. However, for the calculation of the deficit that is reported to Brussels, the methodology used is different. So what counts is the moment in which they are assumed expenditure commitments.
This causes that there are important differences between the deficit that results from one methodology and another. The Ministry of Finance ensures that, in the present case, what happened in the first half of the year and remains in the second, is that the deficit that will be reported to Brussels will be less than calculated in the optical box, and published in the bulletins of budget execution.
according To the Finance accounts, in the first half of the year, the deficit in terms of the commitments was lower than in the 570 million deficit in the optical box. The difference between the date on which the interest is actually paid, and the date in which they were undertaken is the main reason for this difference.
In the second half, provide the Finance, this difference is even more marked, amounting to 740 million euros, with the contribution of the way is accounted for the operation of the concession road trás-os-montes.
The differences are presented by the Executive as more of a reason to believe that the budgetary objectives of the Government are to be achieved at the end of the year.