11 ene 2019


The General State Budget for 2019 is not what the Spanish economy needs right now, in the midst of a decelerating phase within the economic cycle, said CEOE after the Council of Ministers held today, in which the Government made public the general guidelines of this State Budget for 2019.

The public deficit target for 2019 is set at -1.3% of GDP, as opposed to the preliminary figure included in the Budgetary Plan (-1.8% of GDP). Therefore, the initial fiscal consolidation path is resumed. Meanwhile, a reduction in public debt to levels of 95.4% of GDP is expected over the year.

General State Budget

The Government’s State Budget-2019 leans on a macroeconomic outlook that has been revised downwards in comparison to October’s estimations.  Specifically, GDP is expected to increase 2.2% in 2019, one tenth less than previously forecasted. This revision has been due mainly to the lower momentum shown by the global economy and to a higher fiscal adjustment than originally planned.

With the release of more detailed figures still pending, the expenditure policy grows on the social front (whose weight rises to 57.3% of consolidated expenditures), especially in pensions (6.2%) and dependency (59%). Therefore, the improvement in the budget balance is based on a notable increase in tax revenues, especially those that fall on the business sector.

Revenue figures show that Spain does not have a tax collection deficit. In fact, in 2018, and still awaiting the final figures, tax revenues are expected to have reached €207 billion, 1.5% lower than budgeted, but higher, for the first time, than the historical maximum revenues seen in 2007, which ended with a budget surplus.

It is quite clear that, if revenues have recovered pre-crisis levels and, despite this, we are still posting deficit, it is because expenditures have not been contained. For 2019, tax revenues are estimated at €227.356 billion, 9,5% higher than the final revenue figure estimated for 2018, an estimation that seems, indeed, too high, in light of the slowdown expected for the Spanish economy.

With regards to the specifics of this collection figure, revenues are expected to increase €20 million, of which €5.6 billion correspond to new fiscal measures, only a part of which are included in the Budget Law (amendments to the Corporate Tax, Income Taxes, Wealth Taxes and taxes on diesel fuel).

Overall, we believe the estimated increase in revenues is excessive because:


  • The €1.2 billion estimated as revenues from taxes on technological companies seem excessive, since the revenue estimations from the previous government, on a very similar tax proposal, amounted to € 600 million.
  • Of the €1.5 billion corresponding to the net effect of the amendments to the Corporate Tax (net between the minimum tax rate of 15% on the taxable base, a two-point reduction in the nominal rate for SMEs with a turnover lower than one million euros and taxes from part of the profits obtained by foreign subsidiaries, which are currently 100% exempt), the most significant increase in revenue would come from the partial taxation (5% according to the figures announced) of the dividends received from foreign subsidiaries.
  • This item, using the Tax figures for 2016, would contribute in itself €1.3 billion. However, this revenue depends on whether the affected companies continue to receive dividends from the subsidiaries for the same amount as in recent years, and a decrease in this revenue from dividends cannot be ruled out, precisely because of the existence of this new tax obligation.
  • With regard to the increase in taxes from diesel fuel, prior estimations foresaw an increase in tax revenues of €400 million, which now increase to €670 million.
  • These fiscal measures have not been adopted yet, with most of them awaiting their parliamentary processing; therefore, the period in which they would be in force is necessarily lower than an actual year, although this fact has been not reflected in the tax revenue forecast included in the Budget.
  • Finally, in terms of the increase in the taxable base that justifies the remaining forecasted increase in tax revenues (about €14.5 billion, 7% over the actual tax revenues estimated for 2018), this figure seems unlikely in a scenario that foresees a slowdown in our economy.


It must be taken into account that, in the economic context and with the current public debt ratios (96.9% of GDP in 2018), an increase in expenditures that become structural hinders the fiscal consolidation process and constitutes an obstacle to the sustainability of the public finances in the medium and long term. In addition, this budget does not include measures aimed at solving the major challenges of the Spanish economy, such as the sustainability of the public pension system or the reduction of the unemployment rate through the promotion of active employment policies.

This increase in the tax burden on companies is added to the rise in costs associated with the increase in Social Security contributions paid by the companies, with two that stand out due to their special effect: the first one is that the highest contribution base to the Social Security in those schemes in which it is pre-set and the maximum contribution basis applicable to each one of them stands at €4,070.10 per month, a 7% increase; and the second one is that the minimum contribution base in the General Scheme is increased by the same percentage as the Inter-professional Minimum Wage (22.3%), standing at €1,050 per month, and accounts for an estimated additional revenue of €1.484 billion.