Gov’t optimism on revenue goals

The extraordinary levy imposed on businesses last month has bolstered state revenues, bringing satisfaction to the government, as provisional figures show tax revenues rose by 15 percent compared to January 2009, against an annual target of 7 percent. This development has created a sense of optimism at the Finance and Economy ministries regarding meeting the targets of the Stability and Growth Program, although these revenues are temporary and will have to be substituted in the following months and all of 2011 by more permanent sources of revenues. A Finance Ministry official said yesterday that what is really crucial is for revenues from value-added tax (VAT) to increase, given that this is the main source of cash into state coffers after direct taxes. Last year, VAT revenues showed signs of fatigue, which could be reversed given the obligation of taxpayers to collect receipts in order to cover the tax-free threshold for expenses. The same official added that revenues are expected to post a similar growth (15 percent) with increases in the special consumption taxes in alcohol, tobacco and fuel, even exceeding the targets set by the Stability and Growth Program. Filippos Sachinidis, the deputy Minister for Finance, said yesterday that with the increase in the fuel consumption tax (on gasoline and diesel), the budget will get a 1-billion-euro boost. The upcoming hikes will raise the price of fuel by about 10 percent. Still, no one knows whether this billion euros will actually flow into state coffers, as the tax rise may well result in a drop in consumption. The perceived positive reversal of state revenues has led Finance Minister Giorgos Papaconstantinou to issue a directive regarding a rise in market inspections and a program to better monitor companies. Inspections agencies and tax offices will have to issue an annual plan of checks, to be submitted by February 20.

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