The larger than expected recession of 2020 and the “leap” in revenues

The Ministry of Finance is recording an impressive increase in revenues in September, while assessing the worsening of the recession for 2020, according to what ELSTAT announced today

Revenues increased by 29% (against the target), which gives hope to the government’s financial staff to achieve a higher growth rate.

Of course, it is worth noting that taxpayers had to deal with the tax authorities 3 times in September.

The Ministry of Finance estimates the 2.9% excess recorded in the 9-month tax revenues (more than 900 million euros) and at the same time the announcement of ELSTAT, which “raised” the recession bar from 8.2% to 9% for 2020.

Sources in the government’s financial staff did not rule out positive developments in the near future.

Until the submission of the final draft budget in November, there may be a new revision of the target for a growth rate of 6.1% this year,

At the same time, the window remains “open” for new interventions to support households, either through tax breaks or through aid, although at the moment it is too early to announce specific things.

Currently, the priorities are the immediate issuance of the ministerial decision on the heating allowance.

Presenting the budget execution data, Deputy Minister of Finance Theodoros Skylakakis stressed that the significant improvement in tax revenues in September 2021, when tax revenues amounted to 5,012 million euros, increased by 1,127 million euros or 29% against 29%, is a strong indication of a faster-than-expected recovery in 2021. Once this trend is confirmed in the coming months by revenue data and other macroeconomic variables, it improves the financial outlook for 2021 and (depending on revenue composition) possibly in 2022.

The pictures of the 9 months

According to the provisional data on the execution of the state budget, on a modified cash basis, for the period January – September 2021, there is a deficit in the state budget balance of 10,148 million euros. The primary deficit was € 5,958 million, compared to a target of € 8,855 million and a primary deficit of € 7,011 million for the same period in 2020.

The amount of net revenues of the state budget amounted to 39,452 million euros, showing an increase of 1,360 million euros or 3.6% compared to the estimate for the corresponding period included in the explanatory report of the Medium Term Fiscal Strategy Framework 2022-2025. The total state budget revenues amounted to 42,771 million euros, increased by 1,152 million euros or 2.8% against the target.

Revenues from taxes amounted to 33,728 million euros, increased by 943 million euros or 2.9% compared to the target included in the explanatory report of the MTEF 2022-2025, mainly due to revenues from increased tourist traffic, he explains the Finance Ministry in its announcement.

The exact distribution between the categories of revenues of the state budget will be made with the issuance of the final bulletin.

Revenue recoveries amounted to € 3,320 million, down € 208 million from the target (€ 3,527 million). Revenue from the Public Investment Budget (PIP) amounted to € 3,496 million, down € 297 million from the target.

In particular, in September 2021 the total net revenue of the state budget amounted to 4,766 million euros, reduced by 1,094 million euros compared to the monthly target because the advance from the Recovery and Resilience Fund (RRF) amounted to 2,310 million euros originally projected to be collected in September 2021, was finally collected last month. Therefore, excluding the above pre-collection, net income shows an increase of € 1,216 million compared to the target set out in the MTBP 2022-2025 explanatory report.

Total state budget revenues amounted to EUR 5,261 million, down from the monthly target of EUR 1,213 million, but excluding the above RRF advance, total revenues increased by EUR 1,097 million compared to the target set in explanatory report of MPDS 2022-2025.

Revenues from taxes amounted to 5,012 million euros, increased by 1,127 million euros or 29.0% against the monthly target. It is estimated that this excess is mainly due to the increased income of the tourist season, as well as the extension given for the submission of tax returns and the consequent payment of the first and second installment of income tax by 17 September 2021.