Tax takings feed handouts

January revenues beat budget target, covering the cost of the government’s support measures

Tax takings feed handouts

Greece’s tax revenue in January beat its target by a considerable 620 million euros, or 14.1%, according to last month’s budget execution data, continuing the good run of the last few months of 2022 and explaining where the government has found the fiscal space for the latest benefits package.

The net fiscal space from January’s outperformance, according to a senior Finance Ministry source, is €400 million, and the above-mentioned package will cost the budget €650 million. Another €650 million will go toward the Market Pass, which will be financed from the budget reserve intended to support electricity rates, since after the decline in the price of natural gas, the relevant needs are limited.

Alternate Finance Minister Thodoros Skylakakis told Skai Radio on Thursday that no other major measure with a fiscal impact is planned, leaving open the possibility of specific interventions. However, so far the estimated fiscal space has been almost entirely converted into support measures, erasing the prospect of a higher primary surplus than the 0.7% of GDP forecast in the budget.

“We give within the framework of the money we have,” said the ministry source. He argued, moreover, that the government does not want a generalized settlement of private debt, as it would damage the payment culture.

According to the ministry announcement, the overperformance of revenues is estimated to come from the performance of the previous year’s taxes, due in installments until the end of February 2023 (personal and legal income tax, ENFIA) as well as the better performance in the current year’s tax collection (VAT etc). Therefore, according to the announcement, only a part of the outperformance will form part of this year’s income.

Even so, the good revenue trend is expected to continue, even if it does slow somewhat. The government’s economic staff are not worried by the election in terms of its impact on GDP and the budget, according to the same source at the ministry. 

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