Budgeterial Management

Budgeterial Management Income Budget Definitive income forecasts called for 1,085,756 thousand euros, and net recognised economic rights came to 1,071,672 thousand euros, plus 21,619 thousand euros in surplus cash. In fiscal 2003 a total of 1,093,291,000 euros in revenues were applied to fund the Agency s budget; the bulk of that, 1,040,093,000 euros, was provided in the form of current and capital transfers, as broken down in the table below. TABLE No 78 2003 INCOME BUDGET IMPLEMENTATION STATUS Definitive Economic Rights CHAPTER Forecasts Applied to the % Budget (1) (2) (3)=(2)/(1) Charges and other revenues 21.993 28.561 129,9 Current transfers 964.166 963.964 100,0 Income from property 1.500 2.509 167,3 Disposals of real estate 11 Capital transfers 76.128 76.128 100,0 Financial instruments 21.969 *22.118 100,7 TOTAL 1.085.756 1.093.291 100,7 Monetary amounts given in thousands of euros. * This includes 21,619,000 euros in surplus cash used to fund the budget, but because of its economic nature, this sum is not listed as net recognised economic rights. Current and capital transfers comprise 95.8% of the definitive forecast revenues and 95.1% of the economic rights applied to the budget (including cash surpluses). The rest of the income budget primarily comprises charges and other revenues. Amongst the transfers, current transfers account for 88.17% of the economic rights applied to the budget and are made up of: transfers for operating expenses, transfers received as the Agency s share of taxes collected in assessments, transfers obtained as a reward for collecting European Union own resources, and lastly, transfers received in compensation for expenses caused by other services belonging, like the Tax Agency, to the Ministry of Finance (e.g. compensation for expenses caused by other organizations that have offices in the Tax Agency s buildings). Other current transfers come from autonomous organizations to finance the Continuous Training Plan for Tax Agency personnel, and other current transfers come from abroad to be applied to joint programmes run with other European Union countries and those received from the Ministry of the Interior to pay the common costs of a shared building located in Madrid. 135

TABLE No 79 INCOME BUDGET: TRANSFERS IN 2003 Net Recognised Economic ITEM Definitive Rights Forecast (1) % Amount (2) (3)=(2)/(1) Operating expenses 877.915 877.915 100,00 Share in tax assessments 13.929 13.929 100,00 Compensation for expenses due to other services 3.332 3.332 100,00 Own resources collection reward 67.771 67.771 100,00 From other Ministerial Departments 85 85 100,00 Autonomous organizations 533 533 100,00 Abroad 601 400 66,56 Current transfers 964.166 963.965 99,98 To finance investments 39.827 39.827 100,00 Share in tax assessments 36.071 36.071 100,00 From other Ministerial Departments 230 230 100,00 Capital transfers 76.128 76.128 100,00 TOTAL TRANSFERS 1.040.294 1.040.093 99,98 Monetary amounts given in thousands of euros. 136

GRAPH XIV REVENUE BUDGET: CURRENT TRANSFERS 0,11% 0,35% 7,03% 1,44% Operating Expenses Share in tax assessments Compensation for expenses due to other services Own resources collection reward Prop. UE 91,07% Others The transfers made to pay the Tax Agency s share in the funds collected from assessments and collection management are handled through credit generations that have been calculated, as established in point five b) of article 103 of Act 31/1990 on the 1991 National Budget, by applying a percentage (5%, set in article 18 of Act 52/2001 on the 2002 National Budget) to the amount collected. The grand total was 50 million euros, respecting the limitation established in Act 52/2002. This money is listed as current transfers or capital transfers, depending on whether it is applied in the Expense Budget to current operations or capital operations. The money calculated as current transfers amounted to 13,929,000 euros, and that counted as capital transfers, 36,071,000 euros. Expense Budget The Tax Agency s initial budget for fiscal 2003 was 1,029,554,000 euros. Later, in application of article 18 of Act 52/2002 on the 2003 National Budget, this provision was complemented, basically by various credit generations backed by the Tax Agency s share in taxes collected in assessments and collection management, plus other budget amendments concerning smaller sums, so the final provision for the Tax Agency s budget in fiscal 2003 was 1,085,756,000 euros, 3.7% more than in fiscal 2002. 137

TABLE No 80 BUDGET STRUCTURE AND DEVELOPMENT. FISCAL YEARS 2002 AND 2003 CHAPTER 2002 % 2003 % % 2003 / 2002 Personnel Expenses 708.769 67,7 729.700 67,2 3,0 Current expenses 263.415 25,2 281.618 26,0 6,9 Interest expenses 111 0,0 111 0,0 0,0 Current transfers 96 0,0 0 0,0-100,0 Investments 73.988 7,1 73.786 6,8-0,3 Financial instruments 494 0,0 541 0,0 9,5 TOTAL 1.046.873 100,0 1.085.756 100,0 3,7 Monetary amounts given in thousands of euros The percentage of execution of the budget was 99.2 percent. 138

TABLE No 81 BUDGET IMPLEMENTATION IN 2003 CHAPTER DEFINITIVE CREDIT (1) AMOUNT (2) ACKNOWLEDGED OBLIGATIONS % (3) = (2) / (1) Personnel Expenses 729.700 725.851 99,5 Current expenses 281.618 278.112 98,8 Interest expenses 111 6 5,4 Current transfers 0 0 0,0 Investments 73.786 72.270 97,9 Financial instruments 541 540 99,8 TOTAL 1.085.756 1.076.779 99,2 Monetary amounts given in thousands of euros GRAPH VIII DISTRIBUTION OF ACKNOWLEDGED OBLIGATIONS CURRENT EXPENSES 25,83% I NVESTMENTS 6,71% OTHERS 0,05% PERSONNEL EXPENSES 67,41% 139

1. Personnel Expenses With a budget allocation of 729,700,000 euros, the recognised obligations amounted to 725,851,000 euros. During 2003 an average of 27,515 people worked for the Tax Agency, 24,812 civil servants and 2,703 contract employees, for a total of 56 people less than the average for the year before. This variation can be attributed to the 37-person increase in the yearly average number of civil servants and the 93-person reduction in regular employees. In addition, from March to July an average of 290 temporary hires (in annual terms) worked for the Tax Agency providing extra support for the personal income tax season. Recognised economic obligations went up 4.5% over fiscal 2002, basically because of the 2% wage increase set in the 2003 National Budget Act, increases in the number of bonuses paid per three-year span of service and increases in the bonuses paid under the agreement reached by the Tax Agency and labour unions on 13 November 2002 and new civil servants taking up their first jobs. 2. Current Expenses of Goods and Services With a budget allocation of 281,618,000 euros, the total recognised obligations amounted to 278,112,000 euros or 98.8% of the allocated amount. If we compare the recognised economic obligations in 2003 with those of 2002, we see and increase of 20,193,000 euros or 7.8%. A comparison of the breakdown of costs recorded in 2002 and 2003, in terms of budgetary allocations, reflects a decrease in the obligations recognised in point 1.A due to the acquisition of consumables in 2002 for the following year s income tax campaign valued in the amount of 3,281,000 euros. In terms of resources used, regardless of when they were charged to the budget, the cost of the income tax seasons was 9,791,000 and 10,539,000 euros in fiscal year 2002 and 2003, respectively. Point 1.C reflects the increase in the costs of postal notices and income tax filing assistance (4,605,000 and 4,082,000 euros, respectively). The cost increase reflected in part 2.A refers primarily to an increase of 1,737,000 euros for "Building repairs" and 1,036,000 euros for "Cleaning". In point 2.D the most notable changes included an increase of 1,651,000 euros for Technical studies and work and 1,663,000 euros for "electronic communications. Point 2.E reflects an increase of 754,000 euros for indemnities payable for sitting at selective exams and attending courses for internal promotions 140

. TABLE No 82 EXPENDITURE DEVELOPMENT IN CHAPTER 2 CURRENT EXPENSES OF GOODS AND SERVICES ITEM 2002 2003 % 2003 / 2002 1. EXPENSES DIRECTLY RELATED TO 89.940 96.958 7,8 COLLECTION OBJECTIVES 1.A Income tax season and wealth tax season 13.072 7.258-44,5 1.B Manufactured goods and other tax forms 13.576 13.932 2,6 1.C Agency communications campaigns, phone-in taxpayer assistance, letters and postage, legal affairs and litigation, valuations and expert reports, 63.292 75.768 19,7 custody and deposits, per diems and operative travel expenses. 2. EXPENSES INDIRECTLY RELATED TO 153.857 166.731 8,4 COLLECTION OBJECTIVES 2.A Recurrent building expenses (maintenance, supplies, cleaning, security) 50.320 54.778 8,9 2.B Office overhead (furniture maintenance, office supplies and telephone) 19.530 20.139 3,1 2.C Building rental 29.250 30.315 3,6 2.D Data-processing expenses (equipment rental and maintenance, non-capitalisable data-processing 40.416 44.568 10,3 materials, electronic communications and technical studies and jobs) 2.E Other 14.341 16.931 18,1 3. CUSTOMS SURVEILLANCE 14.122 14.423 2,1 TOTAL 257.919 278.112 7,8 Monetary amounts given in thousands of euros 3. Investments With a budget allocation of 73,786,000 euros, the total recognised obligations amounted to 72,270,000 euros or 97.9% of the allocated amount. The heaviest investment was in computer equipment and software, with recognised obligations of 27,721,000 euros, which represents 38.4% of the total investment budget. The funds invested in this area can be broken down as follows: to increase processing capacity, disk and cartridge storage space, to purchase channel extenders and Sysplex Parallel components for the Tax Agency s Central Computer Department, to purchase LAN equipment, to increase Intranet functionalities, to acquire 6,031 person computers, 105 portable computers, 333 laser printers for networks, 687 label printers and 345 scanners, to acquire software to automate operations, to adjust the price of software licenses and to acquire 6,231 new Office licenses. Significant investments in the amount of 23,721,000 euros, or 32.8% of the 141

recognised obligations under this heading, were also made in buildings and other constructions. These funds were invested in the remodelling of the Antequera office (Málaga, 3 rd year), the construction of new administration buildings in Asturias (1 st year), San Bartolomé de Tirajana (Las Palmas, 3 rd year), Vilafranca del Penedés (Barcelona, 3 rd year), Fuenlabrada (Madrid, 3 rd year) and the Navarra Regional Office (2 nd year), as well as for renovating the main lifts (2 nd year) and upgrading and integrating the heating/air conditioning installations (2 nd year) at the Special Regional Office in Madrid, and for work on the Central Administration Office in Madrid (2 nd year). Another major investment item in 2003 was vehicles which, with a total of 9,056,000 euros, accounted for 12.5% of the recognised economic obligations. This item can be broken down as follows: 60 cars, 3 lorries, 6 all-terrain vehicles, a medium-sized helicopter (1 st year), two Flir/TV systems for helicopters, one 30-35 mts boat (2 nd year), two 16-18 mts. boats (2 nd year), a gyrostabilised day vision and infrared system for the Gerifalte-I patrol boat (2 nd year) and two engines for patrol speedboats. The CASA aircraft was also modernized (2 nd year) and transformation work was done on the Petrel patrol boat(2 nd year). Since many of these investments are nonrecurring, the year-on-year comparison of investment lacks the significance it has in other areas. Nevertheless, it terms of recognised economic obligations the variation was minimal, with a decrease of 982,000 euros, or 1.3% in 2003 compared to 2002. TABLE No 83 INVESTMENT BREAKDOWN ITEM 2002 2003 % 2003 / 2002 Land 898 1-99,9 Buildings and other constructions 22.539 23.721 5,2 Machinery, facilities and tools 6.588 4.306-34,6 Vehicles 8.820 9.056 2,7 Furniture and fixtures 6.321 7.423 17,4 Data-processing equipment and 27.957 27.721-0,8 applications Other tangible fixed assets 129 42-67,4 TOTAL 73.252 72.270-1,3 Monetary amounts given in thousands of euros 4. Other Expenses The Tax Agency s Expense Budget also showed a total of 652,000 euros in provisions under various headings: 111,000 euros for financial expenses and 541,000 euros in reimbursable advances made to personnel working at the Tax Agency. Investment Committee The Investment Committee was created by the Tax Agency s Decision of 31 March 1998 establishing the rules for the Committee s organization and operation. 142

Under those rules, the Committee is chaired by the Director of the Human Resources and Economic Administration Department, with the Deputy Director of Economic Administration as Vice Chairman. One representative from each department in the Tax Agency, the Legal Service, the Internal Auditing Service and the Directorate-General s Technical Advisory and Support Office sits on the Committee. Measures passed by the Investment Committee are submitted to the Director- General of the Tax Agency for approval after they have been considered and analysed by the Standing Management Committee. In 2003 the Investment Committee studied and discussed the 2003 Investment Plan and potential amendments and revisions suggested by the bodies responsible for carrying the Plan out. The Committee also tracked the implementation of the investment budget and acquisition proceedings from 2003. 143