ECONOMY

Tax revenues hole set to grow larger

tax-revenues-hole-set-to-grow-larger

Tax revenues will record a shortfall of 7.9 billion euros this year compared to the original budget target, due to the reduction of economic activity amid the health crisis and the impact of the measures taken to contain the coronavirus.

It is highly likely that hole will grow bigger than what the 2021 final draft budget provides for, as it remains unknown whether stores will open for Christmas. If they only open for a few days, the impact will be huge and the tax revenue losses will exceed €10 billion.

The reduction of consumption alone is has estimated to have cut takings by €4.6 billion, which is the biggest open wound that this year’s budget has had to contend with. This was notably included also in the first draft, submitted in early October, long before a second lockdown decision was made, so losses by year-end may prove to be far greater.

Value-added tax revenues are expected to show a shortfall of at least €3.27 billion, and special consumption taxes are seen fetching €752 million less than originally expected.

Total revenues for this year are estimated at €13.67 billion, €3 billion or 17.9% below the budget target.