In­di­rect tax tak­ings miss their tar­gets

Drop in con­sump­tion points to fur­ther slide in rev­enues over rest of 2017, al­though pri­mary sur­plus soars

Kathimerini English - - Focus - BY PROKOPIS HATZINIKOLAOU

The gov­ern­ment has re­ceived its first ma­jor warn­ing that the bud­get is in trou­ble in the form of in­di­rect tax rev­enues for the first cou­ple of months this year, and this at a time when its ne­go­ti­a­tions with the coun­try’s cred­i­tors are in full swing.

The data re­leased yes­ter­day by the State Gen­eral Ac­count­ing Of­fice showed a short­fall in rev­enues from value-added tax and spe­cial con- sump­tion taxes. Still, the ex­ces­sive con­tain­ment of state ex­pen­di­ture has re­sulted in a par­tic­u­larly high pri­mary sur­plus, which soft­ens the im­pact of that short­fall.

Com­bined with the new so­cial se­cu­rity con­tri­bu­tions sys­tem based on tax­able in­come, it seems the tough aus­ter­ity mea­sures in­tro­duced since Jan­uary 1 have led not only to a drop in con­sump­tion but also a rise in the phe­nom­e­non of undis­closed in­comes.

Fi­nance Min­istry of­fi­cials ar­gue that a clearer pic­ture on the course of bud­get fig­ures will emerge from the re­sults of the first four months, as free­lance work­ers and small busi­nesses will pay their VAT due at the end of April.

The main sources of rev­enues to have shown a short­fall com­pared to the tar­gets for Jan­uary and Fe­bru­ary were the VAT on tobacco (13 mil­lion eu­ros or 14.8 per­cent be­low tar­get), VAT on other com­modi­ties (144 mil­lion or 6.2 per­cent), the spe­cial con­sump­tion tax on en­ergy prod­ucts (14 mil­lion or 2 per­cent), spe­cial con­sump­tion taxes on other com­modi­ties (118 mil­lion or 26.5 per­cent) and other con­sump­tion levies (12 mil­lion or 21.9 per­cent).

All signs point to March con­tin­u­ing along a sim­i­lar path, with the 15 per­cent drop in su­per­mar­ket turnover in­di­cat­ing a slide in VAT rev­enues. A re­cent fore­cast by re­searchers IRI re­gard­ing a 3.6 per­cent an­nual drop in turnover at su­per­mar­kets in 2017 gen­er­ates greater con­cerns about the ex­ten­sion of the eco­nomic con­trac­tion well into this year too. If fur­ther aus­ter­ity mea­sures are adopted – even if they con­cern 2019 – the fore­casts for 2017 will have to be re­vised down­ward given the prospect of pen­sion cuts and a re­duc­tion in the tax dis­count.

And yet the year to end-Fe­bru­ary has pro­duced a pri­mary bud­get sur­plus of 2.135 bil­lion eu­ros, against a tar­get for 864 mil­lion eu­ros. No­tably, in the same pe­riod last year, the pri­mary sur­plus had amounted to 2.853 bil­lion.

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