Bank of Spain notes fiscal revenue losses during the crisis

In the six years of the financial crisis from 2007-2013, the Spanish tax take decreased by a total of 3.4%, according to a report from the Bank of Spain.

The study reveals that the annual tax revenue generated by the Spanish government went from €433 billion in 2007 down to €386 billion in 2013.

The areas of income tax and VAT have suffered the sharpest contraction, with revenues falling by 2.5% and 1.7%, respectively.

Government hikes in the tax rates offered some mitigation in the GDP drop. However, if the tax increases are removed from the calculations, the drop in tax collection would stand at 17% over the six year period, which would represent an overall fall of  6% in GDP.

The study notes that a sharp decline of revenues from property taxes, allied to a fall in corporate tax profits were the main contributory factors behind the negative results. Similarly, the decline of domestic demand also had a profound effect on revenues.

Spain’s domestic demand has been on the rise in recent times, with the last two readings of the consumer index showing that confidence had reached record high in Janaury and February of 99.6 and 99.0, respectively.