Strong recovery in 2021 tax revenue: Contrasting with the previous crisis

Strong recovery in 2021 tax revenue: Contrasting with the previous crisis

Fecha: mayo 2022

Susana Borraz Perales and Montaña González Broncano

Tax revenues

SEFO, Spanish and International Economic & Financial Outlook, V. 11 N.º 3 (May 2022)

The revenue managed by Spain’s tax authority, the AEAT, over the past decade has registered average annual growth of 2%. Tax revenue peaked in 2021 at 223.39 billion euros, rebounding by 15.1% from 2020, when receipts contracted. This contrasts with the slower and more gradual recovery etched out from 2010 onwards in the wake of the 2008 crisis. The two most noteworthy aspects of the trend in tax revenue in 2021 include the fact that:
(i) the correction lasted for just one year; and (ii) it was followed by a strong recovery to above pre-pandemic levels in the span of just one year. The differential performance of the recovery in tax revenues during the two crises can be largely attributed to the different institutional measures implemented to mitigate their consequences and the healthy pace of recovery in the tax bases of each of the main taxes, both those related with income and, especially, those associated with consumption. That last factor bodes well for continued healthy tax collection dynamics in 2022, shaped by economic growth, albeit with more moderate growth than initially anticipated on account of the war in Europe and, above all, ongoing high inflation. These favourable tax dynamics, however, rest on the assumption that the measures passed to tackle the crisis unleashed by the war thus far, including the associated tax breaks, do not remain in place for an extended period.

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