March 13, 2013
This is interesting from today’s El País. The paper suggests that the Spanish government could have decided to delay various tax refunds due in December 2012 and pay them in January 2013 instead, in order to close the year with a lower deficit figure.
These refunds (around €5 billion in total) would have affected revenue from VAT and income tax, both individual and corporate. Had they been paid out in December, Spain’s public deficit at the end of last year would have been around 7.2% of GDP. The target agreed with the European Commission was set at 6.3% of GDP.
El País notes that data from Spain’s Agencia Tributaria (tax agency) show that tax refunds in January 2013 were 82.8% higher than in January 2012 (see the table on page 15). This seems to indicate that the Spanish government may have deliberately pushed back the refunds to send a lower 2012 deficit figure to Brussels.
The Spanish Treasury Ministry has denied the reports and given its own version. Basically, due to recent legislative changes, tax refund applications need to be looked through “with greater attention” – and stricter controls take longer. No accounting tricks are being used.
Both versions sound plausible. We would note, though, that even if the Spanish government did dodge including the refunds in last year’s deficit, it will certainly have to factor them into this year’s deficit. Not exactly a permanent fix, although we have seen very similar one-off measures used in Portugal to meet deficit targets (see, for instance, this post we wrote in November 2011).
With that in mind, we can’t help but wonder whether the European Commission will want to know more details about this story, although Olli Rehn & co. seem to be more focused on structural deficit for now.Author : Open Europe blog team