Page 75 - Economic report 2018

that of nine years earlier. In proportion to GDP, this debt volume represents 33%, 1.1 points
less than in 2017. This reduction distances it from the 40% limit established for the central
Government by the Law on Public Finance Sustainability, easily meeting the debt target set
for this year (36.9%) and holds it well below the level of the great majority of European
governments. However, the term structure of the debt worsened, with 59% of debt being long-
term and 41% short-term, compared with the 76%-24% division in 2017.

1.1. Revenue

Settled non-financial revenue was 432.3 million Revenue from direct taxes rose
euros in 2018, 2.1% more than in the previous to a historic high, contrasting with
year, with a budget execution rate of 102%.
This increase contrasts with the decrease in the fall in 2017.
2017 and can mostly be explained by the
strong growth in revenue from direct tax, plus
the rise in investment income, the same two GOVERNMENT NON-FINANCIAL REVENUE
items that caused the decline in revenue in Thousands of euros Chart 8.5
the previous year. In contrast, income from
indirect tax and other taxes and revenue
fell, limiting the rising trend in revenue as a
whole. Other revenue was also obtained from
current transfers and the sale of investments,
although they have minimal relevance in
absolute terms.
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In detail, income from direct taxes increased
18.4%, after the decline of 14.1% in 2017, so
total revenue rose to a historic high of 84 Direct tax Indirect tax
million euros. Accordingly, the percentage of Other taxes and revenue Investment income
this chapter increased to 19.5% of total non- Source: Ministry of Finance.
financial revenue and 38.8% of total direct
and indirect taxes (excluding the chapter of
special taxes and the chapter on foreign trade tax of the central Government). The latter figure
is below the 40% limit set by the Law on Public Finance Sustainability passed in 2014, but
higher than the 35.6% target set for 2018.

The strong momentum in revenue from direct taxes is mainly the result of the good
performance in corporate tax (41.5%). The achieved revenue of 37.4 million euros confirms that
this tax form is a major source of finance for the central Government and indicates a positive
trend in economic activity in the financial
Unlike in 2017, revenue from corporate year. This increase was also helped by the
tax exceeded that of IRPF. improvement in management, collection and The Andorran economy: general developments | VIII. The public sector
inspection of the tax.

In contrast, revenue from economic activities became insignificant as, since the IRPF (Income
Tax) came into force in 2015, income from economic activities is taxed under the IRPF instead
of the tax on economic activities.

The trend in other direct tax forms was also positive in 2018. The IRPF brought 35 million
euros into the public coffers, as a result of a 17.1% increase, indicating favourable behaviour in
family income. However, the IRPF is no longer the main source of revenue in direct taxes as it