BUSINESS

Budget revenues post serious shortfall

By Prokopis Hatzinikolaou

Net budget revenues have already drifted off course after the first couple of months of the year, with the shortfall exceeding 870 million euros after the February goal was missed by 595 million.

Compared with the first two months of 2010, revenues declined this year by 9.2 percent.

Finance Ministry officials embarked on a series of meetings yesterday morning in order to establish the causes for the lagging state revenues and to take initiatives for their rebound.

It appears that the revenue problems arose due to poor calculations by the Finance Ministry while drafting the budget, a reduction in checks and the go-slow tactics of some tax officers in protest at recent salary cuts.

In contrast, there was a 7.1 percent increase in revenues from value-added tax in the first two months of the year compared with the same period in 2010, although for February alone there was a 1.8 percent drop from the same month last year.

The rise is due to the increase in VAT rates as well as the fact that companies are beginning to pay their dues, apparently prompted by a change in the law that makes not paying VAT a crime for which suspected offenders can be tried and sentenced straight away.

A ministry official suggested that state revenues can only stay afloat through VAT receipts; evasion in this domain has been rampant, while certain enterprises use VAT in order to pay off some of their other obligations. This is why the ministry allows enterprises to pay their VAT dues in installments.

There are, however, other miscalculations as revenues of up to 1 billion euros have been included in the budget that are highly unlikely to get into the state coffers by the end of the year, as in the case of the Single Property Tax of 2009 that is yet to be calculated and cashed in.

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