The Government trust income and GDP to tax reform – The World

The Government trust income and GDP to tax reform – The World

The Government has formulated a very ambitious 2015 budget in income, and he is confident that the tax reform will facilitate greater economic growth to 2%, and more jobs. However, what catches the attention of the macroeconomic picture and the outlines of the state budget presented yesterday, is that the government expects to raise in 2015, double what it will grow the nominal economy, measured by the GDP current prices. So while the economy minister, Luis de Guindos, estimated that nominal GDP will grow 2.7% in 2015, Finance Cristobal Montoro, provides for an increase in revenue of 5.4% on the clearance of tax revenue 2014

This forecast is made in the first year of implementation of the tax reform and the history of that Treasury has raised 3.123 million less in 2014 than originally planned, despite the announcement of good behavior of all tax figures.

SegúnMontoro, about 2,000 million this deviation is due to health cent that his Department will begin to return in the coming days for businesses, after the judgment of the Court of Justice of the EU quashed this tax. In any case, discounting this effect, there has been a diversion of income to fall, although the government raised a tenth yesterday in forecasting economic growth in 2014 to 1.3%.

The Government had announced that it would increase growth estimate to 1.5% in 2014. Yesterday we decided to leave it at 1.3% and raise 2015 to 2%, two tenths on the figure shown in the macroeconomic picture sent to Brussels in April.

Finance plans to raise double the nominal GDP will grow

This change comes a few days after the Bank of Spain has warned a slowdown in domestic demand in the third quarter, both in terms of consumption and investment.

De Guindos, who last weekend said that Spain would be affected by the deepening of the European crisis, said yesterday after the Cabinet that “all variables at this time of the Spanish economy are in the right direction and we are in a different ‘to European history. As for the Bank of Spain, he clarified that correspond to the first part of the quarter and that growth in the third party will be “very similar” to the 0.6% in the second.

The main Novelty macro picture is changing economy growth model: opts for domestic demand. Meanwhile, the external, to the decline in exports and increased imports by rising domestic demand, it will stop and to contribute to GDP growth. Specifically, for the first time since the crisis began, the external balance will not bring growth, but deducted a tenth of GDP in 2014 while in 2015 only provide a meager 0.2% when previous forecasts had set 0.5%.

As for domestic demand, Economy raises 2014 growth forecast to double over April to 1.4%, and puts the 2015 at 1, 8%, six more than in the five months tenths. Private consumption is the main challenge. It provides for a 2% increase this year and 2.1% in 2015 and forecasts of improved public consumption. Which means that the government has detained the public setting. Thus, -1.3% in 2014 goes to 0.2% and -1.9% for 2015 puts you in the 1%.

In terms of investment, estimated to be made in equipment will grow by 7% in 2014, 1.5 points on the previous forecast, and 6% in 2015, also points more . The novelty is that, for the first time since the start of the crisis, the Executive expects growth rates in construction investment to 3.1%, 1.3 points more than the latest forecast.

The foreign sector and to provide growth leaves the economy

On the labor market estimates vary little over the table above. The unemployment rate in 2014 is reduced by two percentage points to 24.7%, and four times that of 2015, up 22.9%. De Guindos insisted yesterday that the government will create 622,000 jobs between 2014 and 2015, 20,000 more than those in the previous forecast and Rajoy will fulfill his promise to have less unemployment at the end of the legislature when it came to the Moncloa.

But no fine print. So, on unemployment, the minister compared the isolation rate in the fourth quarter of 2011 (22.56%), when Rajoy came to the Prime Minister, which he hopes to obtain in this last quarter of 2015 (22.2%) , the conclusion of the legislature. Although ignores the decline in the labor force, the difference is that there would be 210,500 fewer unemployed in late 2015 But if the comparison is made with the official unemployment rate (annual average) which is incorporated macro pictures, out otherwise. This average rate was 21.39% in 2011 and by the end of 2015 will be 22.9%. All this means that this calculation Rajoy will have a higher unemployment by 1.5 points was found four years earlier.

Regarding employment, the Government will need to create another 400,000 more than expected between 2014 and 2015 to offset the jobs destroyed in the legislature.

The Authority Fiscal Responsibility Independent reported yesterday that the macro box on the Budgets of 2015 “is plausible as a whole” are based. However, the risks identified possible downgrade on these projections, the agency notes that “it would be prudent to consider the derivatives of the worse outcomes expected of the European economy.”

In any case The Government is confident that growth, employment growth and the effects of the tax reform will make it possible to get more revenue.

According to Treasury estimates, tax revenue this year will reach 186.111 million against the estimated 176,627 who will finally settle in 2014, 9.484 million more. This is the largest rise in tax collection crisis. For income tax, including the effects of the first part of the tax reform is done in this year, the Treasury expects to receive almost 73,000 million, 0.6% less than in 2014 (458 million). Meanwhile, the corporate income tax provides for a 20.4% increase, nearly 4,000 billion. For VAT, the forecast is to raise 4,000 million more (7.2%) due to expected consumption growth. And 800 million more (4%) As for spending in 2014 by Excise.

yesterday the Government only facilitated the comparison of 2015 with the initial 2014 budget with no settlement expected by year end. Thus, spending ministries available falls into two tenths to the net 34,526,000 over the previous year.

This is due to a limit of total spending in the Administration of 129.060 million and its distribution. For example, interest on the debt for 35,490 million (1,000 million less than the original estimate of 2014) are fixed; 30,623 million go to other non-departmental expenses from pension costs of officials of constitutional bodies or relations with the EU. Also consist of 27.970 million, almost 15% less, of State contributions to non-contributory pensions or minimum supplement Social Security, as well as transfers to Inem to pay unemployment, and whose departure descends 4,100 million.

The government will raise the replacement rate of public employees in essential services from 10% to 50%. The announcement yesterday by Finance Minister Cristobal Montoro, who showed his appreciation to the “effort” made by public employees during the last annual budgets. Montoro also said yesterday that pensions will rise at least 0.25% pursuant to revaluation index that guarantees at least an increase of that amount. Pension spending will rise between 3% and 3.5%.