Repeating what was already posted, this time with an introduction.
The presentation of national accounts data may vary by country (commonly, aggregate measures are given greatest prominence), however the main national accounts include the following accounts for the economy as a whole and its main economic actors.
Current accounts: production accounts which record the value of domestic output and the goods and services used up in producing that output. The balancing item of the accounts is value added, which is equal to GDP when expressed for the whole economy at market prices and in gross terms;
Market prices include the cost plus taxes (GST) minus subsidies. Now when taxes go up and subsidies go down market prices go up.
"At a more general level, some are even questioning whether the economy has actually recovered at all. For example, the Spanish economist Eduardo Garzo argues that the official data suggesting that the economy is on the mend derives largely from an accounting adjustment that inflates the value of Argentina’s economic activity:[T]he balance sheet item that has contributed the most to growth (together with the sum of finance and mining, which is a lot), “taxes net of subsidies”, is not an economic sector, but simply an accounting adjustment made to this type of indicator.
The logic is as follows: both GDP and EMAE (the official indicator of economic activity) measure production in monetary terms. They do not measure things, but the monetary value of those things. Therefore, to the wealth produced (gross added value) we must add taxes on production and subtract subsidies on products. It is easy to understand: if the price of a product is 100, and a 20% VAT is applied, its price will increase to 120. There will still be only one product, but its monetary value will be greater, and the GDP (or EMAE) will increase. And the opposite occurs with subsidies: if the price of a product is 100, but the State withdraws a public subsidy for the purchase of 20, its final price will increase to 120. There will still be only one product, but its monetary value will be greater, and the GDP (or the EMAE) will increase.
Consequently, this accounting adjustment can increase the EMAE without any real change in production. And that is exactly what has happened in a remarkable way during the first year of government, as it has increased several taxes and removed many subsidies. The examples are countless: increases in the PAÍS tax, increases in taxes on the fishing sector, the removal of subsidies for transport, electricity, water, energy, the film sector, etc. All of this has significantly increased the EMAE despite the fact that there is no greater production! It is nothing more than a mirage. Let us remember that its contribution to the growth of the indicator is equal to the contribution of finance and mining together, basically because taxes and subsidies..."
