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The VAT reduction of basic foods makes a ‘broken’ of 626 million to the Treasury

Date: May 26, 2024 Time: 07:54:57

The VAT reduction on basic foods implemented to alleviate the effects of inflation has led to a loss of collection of 626 million euros in the first half of the year, according to the monthly collection report for June published this week by the Tax Agency.

Since January 1, the VAT rate on basic foods – a group that includes fruits, vegetables, milk or bread – is zero, instead of the super-reduced 4%, while those on oils and pasta are 5%. , instead of 10%, a measure that will last until the end of the year.

10% year-on-year due to strong increases in products such as sugar (45%) or olive oil (31%). The gas VAT reduction -which is taxed at a rate of 5%, instead of the usual 21%- will also remain in force until the end of the year, which has meant a decrease in collection of 136 million euros in the first half of 2023.

However, the Tax Agency no longer counts the collection impact of the reduction of electricity taxes -VAT, generation tax and special electricity tax, all extended until the end of the year- because they have been in force for more than a year and, therefore, Therefore, it does not affect the year-on-year comparison.

The personal income tax reduction for low incomes subtracts 306 million

The report also reveals the collection impact of the increase in the reduction of work income of up to 21,000 euros in personal income tax, included in the 2023 budgets, and which has saved these taxpayers 306 million euros.

Less significant has been the impact of other measures included in the accounts, such as the extension of the deduction for maternity (34 euros), the additional reduction in the income of the self-employed who contribute by objective estimate (36 million), the increase in the s expenses that are difficult to justify (17 million) or the VAT reduction for feminine intimate hygiene products (8 million).

On the contrary, the implementation of the new special tax on non-reusable plastic containers has allowed an additional 279 million euros to enter and the change in the compensation of corporate tax losses, 232 million more.

The collection in June for the returns of the Rent

After a record 2022, tax collection maintained some strength in the first semester, when it reached 107,009 million euros, 3.8% more than in the first half of 2022. However, when looking at the isolated data for each month, both in May and June, tax revenues show a decrease compared to the same month in 2022, of 5.9% and 0.7%, respectively, which the Tax Agency relates to the increase in refunds.

By way of example, the data provided by the Agency on July 3 on the 2022 income campaign show a sharp increase in the amount of refunds requested (16.5%), much higher than the rise in the amounts to be paid (8.32%).

In the 2023 budgets, the Government already anticipated a slowdown in tax collection, since it recorded a forecast of entering 262,781 million, 7.7% more than in 2022, a year in which collection had skyrocketed by 14.4%.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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