Gross tax bases

In 2020, the tax bases of the main taxes decreased by 7.7% compared to 2019. This is the largest drop since 1995, even greater than that recorded in 2008 and later years, although in that case the recession lasted for six years (Table 1.3). The decline in the bases was, however, less intense than that shown by the sum of the two reference macroeconomic indicators, domestic demand and employee compensation (Chart 1.9). The main reason for this disparity lies in one of the distinctive features of the year, the compensating role played by public revenues, in particular transfers derived from ERTE, which are not directly reflected in these indicators.

This element, the role of public revenues, also explains the difference that occurred between the fall in the bases linked to income and that of those related to expenditure : The former fell by 3.3%, while the latter decreased by 13.9% (Chart 1.10). However, when income from the public sector (public salaries, pensions and unemployment benefits, which include transfers from ERTE) is subtracted from income, the gap between income and expenditure is narrowed (Chart 1.11). It should be noted that income from public sources already had a very significant weight in the set of bases: In 2019, they represented almost 19% of the bases (double the amount of household income), and in 2020, this position was strengthened, reaching more than 22% (close to 42% of households).

The evolution of the bases during the year was determined, logically, first by the extraordinary impact of the lockdown from the second half of March and, then, by the progressive recovery. Thus, the decline began to be noticed already in the first quarter, was accentuated in the months of the strictest confinement and was recovering in the third and fourth quarters, initially recovering strongly and in the final stretch of the year, coinciding with the worsening of the situation and the limitations on mobility, in a more moderate way.

The spending-related bases best reflected the consequences of the first lockdown and the restrictions at the end of the year, with an exceptional decline in the second quarter, a strong recovery in the third and a slowdown in the fourth. In terms of income, this profile can only be seen in the bases once income from public sources has been eliminated and is somewhat blurred by the accumulation in the third quarter of the Corporate Tax bases corresponding to the central half of the year. Taking this into account, the pattern would be more similar to that of spending, with sharper declines in the second quarter and less so in the third.

household income decreased by %. Income from work increased thanks to the boost from public salaries, pensions and unemployment benefits (including payments linked to ERTE). However, other incomes (private wages, capital and business activities) fell sharply, feeling the impact of the decline in activity.

Labour income grew by 1.3%, with very different behaviour depending on whether it came from private salaries, public salaries, pensions or benefits. Private sector wages suffered from all the problems arising from the lockdown and the decline in activity. The drop was 5.8%, more pronounced in SMEs, with greater representation in activities most affected by restrictions, than in Large Companies. Part of this reduction in the wage bill was covered by the Public Employment Service (SEPE) through the ERTE; If these aids are added, the decline would be approximately 2%. In the public sector, wages grew by 5.9% in the year, slightly more than in 2019. The greatest growth occurred in the autonomous communities, especially in the second half of the year due to the increase in the wage bill in healthcare and education. The pension pool grew by 2.9%, less than in 2018 and 2019, years in which pensions were updated more than usual.

Household capital income (furniture, rent and capital gains) decreased by 15.5%, also with uneven performance across sources. In the case of personal capital (-23.9% in the year) the impact was significant as a result of the fall in dividends. Rental income fell by 9.6% compared to 2019, a direct effect of the problems that productive activity experienced throughout the year. Capital gains fell by 15% over the year. These incomes come largely from the sale of real estate, an activity that was severely affected throughout the year by the health and economic situation. Profits from investment funds, on the other hand, had very favourable results, resulting in growth of 14.3% for the year.

Finally, income linked to the profits of personal companies fell by 10.7%. It should be noted that these companies are very interested in activities such as commerce, hospitality, and personal and leisure services, which were among the most affected by the restrictions caused by the pandemic.

The consolidated corporate tax base decreased by 17.9%, less than profits, whose decrease is estimated at 25.9%. The information declared by large companies and consolidated groups in their split payments indicates that the reduction in the tax base in these companies was greater than the fall in the group of companies (-22.5%) and the same occurred in profits (-34.5%). The decline was particularly marked in the groups, with a 44% contraction in profits and a 31.5% contraction in the tax base.

The final expenditure subject to VAT fell by 13.3% in 2020, in a context of practical price stability, as a consequence of the confinement measures and subsequent mobility restrictions. The decline was particularly marked in household spending on goods and services (-16.3%), while spending on new housing fell by almost 6%. The decline in spending was not more intense thanks to the brake provided by the higher spending of the Public Administrations, linked to the coverage of needs arising from the pandemic.

In the part relating to Excise Taxes, the value of consumption subject to Excise Taxes decreased by 17.4% (Tables 1.3 and 5.1). The decrease was observed in both consumption and prices. The fall in consumption was general, in some cases very intense, such as in gasoline and diesel (-14.9%) or in alcohol (-30.6% for the highest alcohol content, -12.1% for beer), a logical consequence of the reduction in internal and external mobility and the closure, to a greater or lesser extent, of the hotel and restaurant industry. Likewise, tobacco consumption (6% for cigarettes, although, as in previous years, other products increased) and electricity consumption (-5.7%) experienced losses. The above causes were also behind the drop in fuel and electricity prices, which were the most significant factors in the evolution of this base. In this sense, the average price of gasoline and diesel fell by 13.7% (21.2% before taxes, Table 9.1) due to weak demand throughout the year. In electricity, the decrease was 5.5% (Table 5.7), although increases began to be observed in the last days of the year.