First-quarter figures for Malaga province suggest another record year for tax revenue

For three years running - since 2021 - authorities in Malaga province have collected record taxes, and 2024 could make it a fourth. Indications are good judging by the tax revenues paid by the people of Malaga in the first quarter of 2024, according to the provincial headquarters for the Treasury.

Between January and March, taxpayers in the province paid 1.061 billion euros, an increase of 65.8% compared to the 640.43 million euros registered in the same period last year. The difference is more marked as that was a decrease of 27.2% compared to the first quarter of 2022 due to the mishap with corporate tax that left the main tax authority in Malaga shelling out very large refunds. But this situation did not prevent 2023 from becoming another record year for tax revenue in the province with 4.685 billion euros, 5.5% more than in 2022. In any case, the revenue figure for the first quarter of 2024 not only exceeds that of 2023, but also that of 2022 (880.3 million euros).

The increase in the volume of taxes paid by the people of Malaga, the aforementioned 65.8%, is much higher than the growth recorded in Spain as a whole, which stands at only 7.5%, pretty close to 60.4 billion euros. In Andalucía taxes collected in this first quarter have risen at a rate of 19.3% to 4.838 billion euros.

If we compare taxes paid in Malaga and in Andalucía as a whole, out of every 100 euros paid by taxpayers in the region, almost 22 euros are paid by the people of the province.

The tax that has undoubtedly performed best in the province compared to a year ago is corporation tax. True, it does not add revenue for the time being, it is a subtraction. However, the numbers in red this year are significantly rosier than those of last year. By March 2023 corporation tax levied was in the red by 390 million euros despite a gross income of 54.31 million, because it was necessary to deduct more than 444 million as refunds claimed back by corporate taxpayers. In contrast, for the first quarter of this year there were only refunds of 93.5 million from a gross income of 57.1 million, resulting in a negative collection of only 36.35 million.

For Spain as a whole, however, corporation tax has remained in the red, which has prevented a healthy increase in total tax revenue for the country: 6.1 billion euros in the red, practically the same amount as at the end of March 2023, because the gross revenue of 1.821 billion euros includes tax refunds. As the tax office's number-crunchers put it: "only next month when the first instalment is paid to the Treasury will it be possible to make a proper economic assessment". As of today, they point out, this tax cannot be used "as an indicator of what is happening with profits in 2024."

Regardless of the percentage of increase that does vary, Spain as a whole is seeing a growth in tax revenues, be that personal income tax or corporate taxes. This is due, according to the tax experts, to "the favourable progress of withheld funds from earned income and capital gains". To explain the former, the tax collection report published on Monday cites "the robustness of job creation and the rises in salaries, pensions and effective rates." As for income earned from capital, this has been sustained both by the boost provided by the rise in interest on bank accounts and by the significant increase in dividends.

These issues are particularly visible in personal income tax (IRPF), which is also the tax that contributes most to the public coffers in Malaga. IRPF has grown by 11.4% year-on-year to over 524.7 million euros. In Spain as a whole, the rise in revenue was slightly behind at 8.3%, to almost 32.2 billion euros.

After personal income tax, IVA (Spain's sales tax) is the second most important tax in terms of revenue in the province. IVA collection increased by 5.7% between January and March and in the year-on-year comparison to 495.43 million. For Spain the increase was 5.4% to 26.627 billion. The increase in revenue from this tax is largely due, according to Monday's report, to the rise in the rates applied to energy. In the wake of the Russian invasion of Ukraine and the sharp rise in inflation, the government cut IVA on gas and electricity, which this year, in view of the fall in energy prices and the CPI (Consumer Price Index), is now being reversed, rising from 5% to 10%. But it will not be until May that the impact of the return to the general vat rate of 21% will be seen in revenue collection, so there is still room for improvement in the collection of this indirect tax, even if it is only due to regulatory issues.

Interestingly, in Malaga there has been no trace of the improvement observed at the national level in excise duties (up 6.6% to 4.88 billion euros) as a result of the increase in the rate of the tax on electricity and the impact recorded in January of the tax on non-reusable plastics that began to be collected in February 2023. Revenue from excise duties fell by almost 40% in the first quarter in the province to 6.7 million.

Finally, in Malaga tax revenue from Customs duties paid for the import of foreign-plated vehicles also fell by 11.4% to 4.3 million euros. The same, and this is more important in terms of the amount of tax collected, is true of non-resident income tax, with revenue falling by 13.9% year-on-year to 50.75 million euros.