The extension of the anti-crisis measures increases the impact for the Central Administration accounts by around 1,700 million
MADRID, 9 Jul. (EUROPA PRESS) –
The Independent Authority for Fiscal Responsibility (AIReF) believes that core inflation will be below the threshold of 5.5% next September, so that the usual VAT tax rate on food would be recovered over the last two months of the year.
Thus, according to AIReF’s calculations, the Government’s decision to maintain VAT reductions from 4% to 0% on basic necessities and from 10% to 5% on other basic products will have an impact for four months in the second semester. of the year with an estimated value of about 520 million, reaching about 1,300 million during the entire year 2023.
The Government stipulated in the decree approved at the end of June by which it extended some measures to deal with the economic consequences of the war in Ukraine, that these food tax reductions will remain in force until December 31, 2023, provided that the year-on-year rate of core inflation is above 5.5%.
“If it falls below that rate in the month of September, whose data will be known in the month of October, the usual VAT tax rate on the aforementioned food in the last two months scheduled for the application of the measure would be recovered. That is, since November 1,” warned the Executive.
The Independent Authority led by Cristina Herrero estimates that the total cost of the approved response measures to the economic and social consequences of the war in Ukraine and the drought will be 1.1% of GDP in 2023, two tenths more than what anticipated in their previous projections.
In its new report on budget execution, AIReF adds these two tenths to the impact of the measures against the economic consequences of the war in Ukraine due to the effect of the extension of measures approved at the end of June by the Executive, among which stands out the extension of the VAT reduction to basic foods and the reduction to public transport passes.
According to the calculations of the organization chaired by Cristina Herrero, the total cost of the spending measures for the Central Administration caused by the economic crisis and the war in Ukraine amounts to 0.6% of GDP, almost 9,000 million euros.
The impact for 2023 of the spending measures for the Central Administration approved in response to the economic and social consequences of the war in Russia has increased by some 1.7 billion euros compared to the previous AIReF forecast due to the extension of some of measures.
Among the measures extended, the bonus per liter of fuel to the transport and agricultural sector stands out, whose extension until the end of the year adds just over 300 million euros of impact on spending in 2023. In addition, almost 400 million additional euros are due to the extension of direct aid for collective urban and interurban passenger transport, channeled through the autonomous communities and town halls.
On the other hand, the last two royal decree-laws approved include sectoral aid for almost 850 million euros, mostly aimed at alleviating the consequences of the drought in the country through the Agrarian Guarantee Fund.
Aid to individuals, for its part, includes as a novelty those aimed at reducing the train ticket for young people, which increases spending for this year by more than 160 million euros.
AIReF has also reviewed the impact of the rest of the measures, all of them already established from the beginning until December 31, 2023, with the latest information available in the monthly reports of the Tax Agency and with the update of future prices of electricity.
Specifically, a reduction in income of about 3,100 million is expected due to the reduction in the VAT rate to 5% on electricity, natural gas, firewood and pellets, and of about 2,000 million due to the reduction to 0.05% of the VAT rate. Special tax on electricity.
In addition, the impact estimated by AIReF of the loss of collection due to the suspension of the Tax on the value of electricity production (IVPEE) is around 2,700 million in 2023.
