Estonia collects 45 percent of six month's budget

  • 2000-07-27
  • Kairi Kurm
The Estonian state budget department collected 12.9 billion kroons ($772 million) in revenues in the first half of the year, which is about 45 percent of the budget for 2000. The best inflow to the state budget was the corporate income tax and the worst was the excise.

By the end of June, the national state budget had received 124 percent of estimated corporate income tax or 787 million kroons and 1.3 billion kroons from personal income tax, which is about 44 percent of the annual target.

"The inflow of taxes on income and profits turned out to be better than we expected," said Dmitri Volkov, analyst at the Ministry of Finance. He said that the government had received about 500 million kroons from Eesti Telekom and 400 million kroons from Hansapank.

The revenue payments from the value-added tax and social tax came in as expected. The state budget collected 3.6 billion kroons from VAT and 5 billion kroons from social tax during the first half of the year.

But the share of excise tax in the state budget for six months was only about 33 percent or 1.2 billion kroons. The excise duties planned on alcohol, 497 kroons, came as anticipated. The excise received for motor vehicles was 60 million kroons (43 percent), motor vehicles fuel excise was 450 million kroons (25 percent) and tobacco was 187 million kroons (25 percent).

Volkov said that the ministry was too optimistic about the revenue flow from tobacco excise tax.

"First of all, the volume of tobacco imports was smaller, because the importers had brought in two months supply in advance of the raise in excise duties on tobacco on Jan. 1, 2000. Additionally, the size of the illegal market has increased due to the rise of excise duties. According to some importers, the size of the illegal market may be about 25 percent."

The decline in the fuel excise is also caused by the rise of the illegal market, said Volkov. He said that imports of fuel have decreased by 30 percent compared to the same period in 1999, while the imports of fuel components in the first five months had increased by 2.5 times.

The excise duties did not bring in as much as predicted for 1999, when the state received only 78 percent (2.7 billion kroons) of the target.

At the same time, the state managed to spend 2.5 percent more than it earned in six months. The consolidated expenditure of general government amounted to 13.6 billion kroons in six months this year, which is 681 million kroons more than it gained for the same period, year on year.

The size of the deficit is, however, in accordance with the economic policy memorandum to the International Monetary Fund, in which the state is promising to keep the fiscal deficit of the general government in 2000 to no more than 1.25 percent of GDP and 700 million kroons during the first six months.

"According to our latest predictions, the deficit of the general government will stay on the level of 1.1 percent of the forecasted annual GDP," said Volkov.

According to Tiiu-Tatjana Reinbusch, deputy head of the state Budget Department at the Ministry of Finance, May and June were the most costly months.

"It is the period when the tax board is paying out the sums declared in the tax declarations, and teachers are paid for their summer vacations in advance," said Reinbusch.