The machinery of state revenues and expenditures move in opposite directions. The resources into public coffers barely covers half the money pledged by the Administration in its spending policies. The red numbers of the state reached 50.946 million euros, in cash terms, between January and July compared to 10.553 million in the same period in 2008.The budget deficit, already at 4.8% of GDP, has increased fivefold in a year by the recession and the ‘active fiscal policy “of government, according to the Ministry of Economy. The result is that income until July of 57.757 million euros, cover only half the cost generated by the State, 108.703 million.
Salgado Department argues that “the various measures taken by the Government” as “tax cuts, advances refunds, deferrals and other initiatives aimed at promoting employment and investment,” have drained 25,000 million euros from the coffers of state. The other half of the budget gap should, according to Treasury, the impact of recession on the collection of major taxes.
The explosive mix of spending plans under way and the recession may bring the government deficit to 9.5% of GDP at the end of this exercise, ie to touch 100,000 million euros, according to official estimates.
The Government sent a stability plan to Brussels in which he undertakes to bring to heel its 2012 budget deficit and return to the criteria of the euro area (3% of GDP). For services to Funcas studies the goal is “sick inconsistent” if the government did not start planning policy “highly restrictive” or spending an upward revision of taxes.
The latter possibility seems the more force has begun to defend La Moncloa. Although the fund balance as of July seems to indicate that a touch point for some taxes will not solve the problems of the Treasury, who is facing extraordinary expenses in the short term as the reform of the regional financing or political advertisements as the new subsidy EUR 420 for the unemployed who exhaust their benefits.
The first casualty of the recession are the families. In twelve months, the labor market has destroyed 1.4 million jobs and reduced the purchasing power of households. In fiscal terms, this translates into a fall in net revenue of 16.9% and direct tax revenues recede by 14%.
The low 36.1% VAT and Excise, 3% (the duties on alcohol fell by 13.3%, and gasoline, 6.3%). The consumer slowdown has cut business results. Thus, fund companies fell by 25%. For its part, the IRS is the main source of state finances, reduced its revenue by 12.9%.The mattress loses Social Security
The main muscle of the bonanza of public accounts in recent years either escapes from the crisis. Social Security had a surplus of EUR 8611.84 million through July, a 33% lower than the same period in 2008, according to the Ministry of Labor and Immigration. The vortex of unemployment has eroded resources to the state coffers.
With 4.1 million people unemployed, the number of contributors has fallen dramatically, dragging income. So while these barely rose 0.03% to 73,060 million euros, the cost of Social Security climbed by 7.2% to 64,448.93 million.
Secretary of State for Social Security, Octaviob Granado, argued yesterday that July is special because the bonus is payable to all pensioners, which “means that every year they pay more than you enter. However, the trend about the possibility of a deficit at the end of the year.
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