Tax takings point to recovery

Tax takings point to recovery

The course of January-September tax revenues is offering the clearest signs of fiscal recovery yet, and faster than expected too. If that turns out to be right, it will also expand the margins for additional measures to ease the pressure on households and corporations, according to a Finance Ministry source.

The budget data on the first three quarters of the year, released on Friday, showed tax revenues were 943 million euros or 2.8% higher than the target set by the midterm fiscal plan.

In September alone, tax takings were €1.127 billion or 29% higher than planned, though that is partly attributed to the option for the payment of up to three monthly tranches of income tax in the same month. However, for the overall rise in January-September, the overshoot is attributed to the increased revenues from the tourism season that also translate into an increase in gross domestic product.

Commenting on the September growth in tax revenues, Alternate Finance Minister Thodoros Skylakakis said, ”This is a strong indication for a faster-than-expected rebound in 2021.” If this trend is confirmed over the next few months by the revenue figures and other macroeconomic variables, it will improve the fiscal prospects for 2021 and (depending on the composition of revenues) possibly 2022 too.

The ministry will decide whether there is any margin for further tax breaks when it has the October data in hand. Still, a ministry source ruled out the abolition of the solidarity levy for civil servants and pensioners next year (as is the case for private workers), pointing instead to 2023 should there be the necessary fiscal leeway in place. The same source stressed that a recourse to justice would not make things any better as it would increase uncertainty.

The primary budget deficit in the year to end-September amounted to €5.9 billion, against a target for €8.8 billion in the midterm fiscal plan, and a primary deficit of €7 billion in the same period last year.

The result is partly attributed to budget expenditure that was €1.5 billion below the target.

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