The execution of tax revenues from the 14 taxes recorded by the Tax Collection Office of the Superintendency of Tax Administration (SAT) exceeded the goal established for the first half of this year by 17.6%, with a result of Q49,364.6 million against the expected Q41,993.4 million.
However, compared to the same period of the previous year, records indicate that the increase was 7.3%, since the amount collected exceeded by only Q3,367 million the Q45,996 million collected between January and June 2023.
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Although the indicator is in positive territory, there has been a lower dynamism, especially in income tax (ISR), value added tax (VAT) and foreign trade taxes, which, according to the authorities, is a reflection of the progress of the economy, and is one of the measurable indicators during the first hundred days of the administration of President Bernardo Arévalo and his cabinet.
For taxes
In the collection statistics reported in June, and recently published in the internal taxes, ISR and VAT category, the growth rate for income tax is 6.8% and for domestic VAT, which records the consumption of goods and services, it is 7.2%.
For example, for income tax, the accumulated collection in the first half of the year was Q14,811.6 million, while in the same period last year it was Q13,920.2 million, which represents a slight increase of Q891.4 million. For VAT, the collection was Q11,225.7 million, and last year it reached Q10,470.4 million, or Q755.3 million more.
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The importance of both taxes in the tax collection system is that they support most of the operation and investment of the state budget, and anything that may happen with their collection can affect the different programs of the central government and the different agencies.
Internal taxes reported a cumulative total of Q34,828.3 million in the semester, which is equivalent to Q2,366.5 million more than in 2023, when they stood at Q32,461.8 million.
Regarding taxes on foreign trade, the execution report indicates that the accumulated amount was Q14,536.3 million, about Q1,112 million more than in 2023, reaching Q13,535.1 million, or 7.4% more.
“The basis of these results is that they are consistent with the average scenario estimated by the central bank regarding nominal economic growth.”
Érick Echeverría Mazariegos, Tax Collection Superintendent
Here the statistics highlight that the VAT on imports was Q12,462 million, being Q793.1 million higher than the Q11,668.9 million of last year, so the growth was 6.8%.
What explains it?
Free Press He consulted Erick Echeverría Mazariegos, the tax revenue manager, who explained the basis for these results, reiterating that they are consistent with the average scenario estimated by the central bank regarding nominal economic growth.
“Therefore, tax collection is in line with the pace of economic activity projected for this fiscal year.”
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When classifying taxes, he said that those corresponding to foreign trade have recovered 7.4% in the first half of the year, compared to a fall of -0.3% in the same period last year.
As for internal taxes, the growth was 7.3%, which is positive, although less dynamic, but which is “very much in line with the behavior of economic activity.”
Moderate trend
Echeverría Mazariegos indicated that a moderate trend has been observed compared to last year, as the ISR had growth rates of 11% in the same period of 2023. In domestic VAT, “it has been observed that the collection has been responding to this behavior of economic activity and there are some sectors that are being reviewed because due to their importance, they have been showing a slight deceleration in their annual settlement and these are commerce, industry and construction, which is why some State suppliers have been analyzed.”
What reading is there?
Abelardo Medina Bermejo, an analyst at the Central American Institute for Fiscal Studies (Icefi), considered that the results of the collection of taxes for the first half of the year are relatively normal in accordance with the values that have been presented since 2021.
He said that, overall, tax collection shows a year-on-year increase of 7.3% compared to the same period of the previous year, slightly above the 7% that the Bank of Guatemala (Banguat) predicted as economic growth (nominal).
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“As such, the tax collection has a behavior quite in line with economic activity, although there are taxes, such as the solidarity tax (ISO), those related to foreign trade and the beverage distribution tax, which have had remarkable behavior.”
The largest taxes, VAT and ISR, grew by 7% and 6.4% respectively, as did economic activity, as it should be, according to the theoretical formulation. However, it is interesting to note that ISR in its liquidation has less growth, which may be associated with the fact that there is an increase in the payment of the ISO by taxpayers (which implies that ISR credits then increase).
“The revenue has a behavior quite in line with economic activity, although there are taxes, such as solidarity, those related to foreign trade and the distribution of beverages, which have had remarkable behavior”
Abelardo Medina Bermejo, Icefi analyst
He reiterated that tax performance is not exceptional, and while it is true that collection is 17.6% above the planned target, this is simply a consequence of the underestimation of the values forecast by the Superintendency of Tax Administration (SAT), which have not been corrected, given that the budget readjustment has not been approved.
Closing in 2024
The mayor also provided an outlook on what the revenue collection will be like at the end of the fiscal year and insisted that the relationship with productive activity would be maintained.
He confirmed that the efficiency of VAT continued to increase in the first quarter of the year, a calculation that is possible with the revelation of the first quarterly gross domestic product (GDP) released by the central bank.
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The efficiency of the first quarter of 2023 was 47.1 and 47.5 in 2024, so the expectation is to maintain the collection in relation to the economic activity, so we began to know the productive sectors that have shown a slowdown, to know other variables beyond the loss of economic activity and establish control actions.
He confirmed that the collection at the end of the fiscal year could exceed Q100 billion.
Tax burden of 11.7%
For Icefi, the estimate that is regularly carried out has shown, since last year, that the expected tax burden for this year will fluctuate around 11.7% of GDP, similar to that observed in 2023.
As for the total amount collected, it is estimated that it will be around Q102.2 billion, reporting a growth of close to 7% and an excess over the collection goals of around Q15.9 billion, “which, as has been pointed out, is mainly due to the underestimation of that value.”
The aforementioned research center notes and recommends that it will be interesting to evaluate in the future the determination of how much of said collection corresponds to the behavior of economic activity and how much to the administrative measures of the SAT, especially since the expected growth is practically explained by the economic activity itself. “However, this is an issue that must be addressed at the appropriate time by the Ministry of Public Finance, as the governing body of fiscal policy.”
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