Tax revenue exceeds goals, but officials try to dampen handout expectations

Tax revenue in July exceeded the government’s expectations, meaning that it will be able to achieve the primary budget surplus demanded by the European Union.

But Ministry of Finance officials were trying Thursday to dampen excessive expectations of handouts to be announced at the Thessaloniki International Fair (TIF) early next month.

The government will continue to combine social awareness and fiscal stability, the officials told Kathimerini.

When delivering his keynote speech at TIF on September 9 – a forum traditionally used by heads of government to outline economic priorities for the coming year – Prime Minister Kyriakos Mitsotakis is expected to focus on lower incomes, which will continue to receive subsidies for their electricity bill, as well as the so-called “heating subsidy.” Also, some pensioners who, as a result of prior legislation, are seeing their pensions slashed, will also receive a handout.

Tax revenue for the first seven months of the year (January-July) was €33.768 billion, 7.5% or €2.347 higher than the 2023 budget’s goal. For July alone, tax revenue was €6.554, up €193 million or 3% from the budget estimate.

The budget’s primary surplus – which excludes debt servicing – was €3.555 billion in January-July, up from a target of €1.83 billion and a turnaround from the €1.161 billion primary deficit registered during the same period in 2022. This result is also due, to a higher extent, to lower spending.

Finance Ministry officials point out that the enhanced revenue is the result of cash operations and not fiscal policy. Car circulation fees, for example, which were supposed to be paid by the end of 2022 were actually paid in February 2023; the amount of €470 million, which would normally be among the 2022 revenue was moved into this year’s ledger. Similarly, delayed tax receipts were €367 million.

The actual extra tax revenue from January-July 2023 is €874 million and not €2.34 billion, as the cash statements show. And the Stability Pact with the EU calls for extra revenue of €1.7 billion by the end of the year. The stability pact’s primary budget surplus target equal to 0.7% of GDP remains, they say at the Finance Ministry.