ECONOMY

Primary surplus in Q1, but VAT revenues keep sliding

The state collected 506 million euros less than targeted in indirect taxes in the first quarter of the year, cutting short the enjoyment of the primary surplus attained in the January-March period against a forecast for a primary deficit, according to data released on Tuesday by the State General Accounting Office.

Adding to Finance Minister Yannis Stournaras’s worries is the fact that social security funds have absorbed 30 percent of their annual credit from the budget.

The government achieved a primary surplus of 520 million euros in the year to end-March against a target for a primary deficit of 2.3 billion.

Once again the shortfall in budget revenues is from indirect taxation, proving that the impact of the six-year-long recession has not yet been assessed properly. There has been a huge decline in consumption and this has had an immediate effect on indirect levies such as value-added tax and special consumption taxes.

The data released yesterday attribute more than 40 percent of the shortfall to the fact that VAT revenues were 217 million euros off target in the year’s first three months. The biggest problem concerns VAT from fuel, which missed its quarterly target by 126 million euros.

Revenues from the special consumption taxes on tobacco and other commodities (not including fuel) came in 144 million euros below target, while those from energy commodities registered a shortfall of 55 million. However, the Finance Ministry says that special consumption tax revenues from tobacco products seem to have rebounded in March as the 33.3 percent shortfall in the year’s first couple of months was contained at 19.8 percent in Q1.

The picture is far better for direct taxation: Revenues grew by 95 million euros thanks to the 101-million-euro increase in property tax receipts. In total the net revenues of the state budget amounted to 12.3 billion euros, against a target for 11.3 billion. This excess of 985 million euros is attributed to the slow rate of tax rebates (down by 467 million euros from their target) and the increase in revenues from the Public Investment Program that reached 1.6 billion euros, from a target for 790 million.

Expenditure beat the target by 1.09 billion euros, as primary spending came to 11.1 billion euros against a budget provision for 12.2 billion, thereby leading to a primary surplus.