Budget meets the targets set for 2012

Spending painfully reduced while property levies offset revenue loss from tax evasion, consumption drop By Prokopis Hatzinikolaou

The budget target for 2012 has been met, official data showed on Tuesday. The primary deficit closed at about 3.45 billion euros against a 4.58-billion-euro target set by the Finance Ministry and the country’s creditors. However for the government to meet this target, it was forced to take extra measures in the form of more taxes, curtailing the Public Investment Program and a reduction in expenditure, as well as holding off on making state payments to third parties.

According to the figures released by the General State Accounting Office, the deficit of the state budget was reduced by 31.1 percent from 2011 and amounted to about 15.69 billion euros, against a target for 16.31 billion. The budget might have had even better results if certain social security funds had not required additional funding during 2012.

Net state budget revenues amounted to 51.92 billion euros against a target for 52.39 billion, representing a 468-million-euro shortfall. Compared to 2011 they were reduced by 3.72 percent.

The target was missed due to reduced revenues from the Public Investment Program (3.59 billion euros), against a target for 4.68 billion.

The favorable divergence from the revised target for 2012 came from the bigger-than-expected takings from the following revenue sources: income tax (by 230 million euros), property taxes (107 million), reduced tax returns (517 million), other direct taxation (207 million), road tax (55 million) and non-tax revenues (55 million).

Taxpayers paid levies amounting to 9.97 billion euros last year – 20.3 percent more than in 2011. Property tax proved a great help to the budget, as receipts from the special property tax tagged onto electricity bills, the 2009 Single Property Tax and the FAP property tax for 2010 added up to about 2.86 billion euros. On the other hand, receipts from value-added tax fell 11.4 percent year-on-year due to the drop in consumption, as well as the perceived increase in tax evasion.

Budget spending amounted to 67.6 billion euros, against a target for 68.7 billion. It was also reduced by 11.9 percent from 2011, data showed.