25% of tax revenue from Madrid goes to other regions, according to BBVA

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In 2020, the people of Madrid contributed more than 5,700 million euros to the communities with the lowest income from their regional tax collection, just over 25% of the total; the Catalans close to 1,900 million, 9%; and the Balearic Islands almost 200 million, around 6%.

According to the BBVA Research report on the 2020 liquidation of the financing system of the autonomous communities under the common system (all except Navarra and the Basque Country), income through this equalization route exceeds 20% of homogeneous tax income in 10 of the 12 receptor regions.

These revenues are particularly important in the Canary Islands, where they account for more than half of total revenues; and they are only below that 20% in the Valencian Community (6.49%) and Aragón (10.64%).

As a whole, the regional financing system contributed in 2020 to the communities with the lowest income extra resources for just over 16,000 million euros, some 8,500 million from the State and another 7,800 million from the territories with the highest per capita income: Madrid, Catalonia and the Balearic Islands.

According to this report, made public this Monday, the total volume of the definitive financing of the common regime communities, measured at homogeneous powers and equal fiscal effort, experienced a drop of 11,200 million in 2020, 9%, with respect to 2019, due to the poor evolution of regional and state tax revenues due to the Covid crisis.

This fall, however, was “more than compensated” by an injection of extraordinary resources by the State amounting to 19,600 million, of which 4,400 million arrived in 2022 through the cancellation of the negative balances of the liquidation of the financing system regional corresponding to 2020.

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Considering the effective financing per adjusted inhabitant, the differences reach 612 euros, between the maximum of 2,991 euros in Cantabria and the minimum of 2,379 in the Valencian Community.

The 2020 financial year was “atypical in many ways” due to the arrival of the Covid pandemic, to which the Government reacted by “significantly” increasing transfers to the autonomous communities so that they could face the crisis without excessive financial worries.

The following table shows, by Autonomous Community, the homogeneous tax revenues, the effective financing for homogeneous powers, the difference between both magnitudes (all of them in millions of euros) and the effective financing per adjusted inhabitant (in euros) in 2020:

Homogeneous tax revenues Effective financing at homogeneous powers Difference Effective financing per adjusted inhabitant

Andalusia 15,615 19,926 4,311 2,404

Aragon 3,308 3,660 352 2,586

Asturias 2,343 2,866 523 2,644

Balearic Islands 3,428 3,232 -196 2,788

Canary Islands 2,808 6,073 3,265 2,746

Cantabria 1,382 1,770 387 2,991

C. and Leon 5,549 7,045 1,496 2,703

C.-La Mancha 3,959 5,218 1,259 2,451

Catalonia 21,650 19,780 -1,869 2,604

Valencian Community 10,996 11,710 714 2,379

Extremadura 1,833 3,131 1,297 2,802

Galicia 5,698 7,604 1,906 2,611

Madrid 22,702 16,967 -5,735 2,589

Murcia 2,893 3,498 604 2,358

La Rioja 740 940 200 2,859

TOTAL 104,905 113,419 8,514 2,555

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