Flagging revenues call for action
Budget revenues need to increase by 26.4 percent compared to last year in order for the government to achieve its annual fiscal target. From now until the end of the year, the Finance Ministry will need to earn 26.4 billion euros, which works out to a steep monthly total of 5.3 billion euros. With August budget data yet to be published, sources said revenues for the eight-month period rose by 2.8 percent, versus an annual target of 13.7 percent. One problem area for the Finance Ministry is the collection of value-added taxes, with income from this revenue source remaining stuck in the red. The VAT rate is due for another increase as of January, with a number of goods and services expected to be moved into the top 23 percent bracket, but the government may be reconsidering this after hearing the concerns of business groups about the impact this will have on the market. Other sources have indicated that revenues from cigarette levies are likely drop off in the coming months, as recent tax hikes on tobacco products have resulted in more illegal trade in the sector. Additionally, decisions by tobacco companies to slash their prices in a bid to protect their market share is resulting in lower revenues for the state. In a bid to offset the drop, the Finance Ministry is weighing a number of options, such as helping taxpayers with outstanding amounts owed to the tax office, with the opportunity to settle the issue by reducing the penalties imposed. Another potential income source is introducing greater motives for consumers to collect receipts, as was done earlier this year. A decision by the Finance Ministry to allow taxpayers to up their annual tax-free threshold based on the amount of retail receipts collected boosted state revenues, due to consumers demanding proof of payment from goods and service providers. However, in recent months, consumers appear to be asking for fewer receipts, prompting the ministry to examine changes to the system. One possible change is to double the tax benefit provided for receipts from certain professional groups, such as doctors and plumbers.
