Budget: What causes the huge primary surplus and excess tax revenues?

In 2024, the state budget is also experiencing prosperous days, largely due to the accuracy, and to indirect taxes that excessively affect consumers. In addition, the continued good progress of Greek tourism creates a surplus in income, while the overall picture is reflected in the huge primary surplus of 5.68 billion euros in the seventh month, which is about 4 billion euros more than the target set (the target for the period January-July is 1.65 billion euros. However, even if the comparison is made with the same period last year, the difference exceeds 2 billion euros, since the corresponding result for the seven months of 2023 amounted to 3.558 billion. At the same time, the exceeding of the tax revenue target by 6.7% in the seventh month of 2024 and the corresponding 15.7% in July, shows that citizens are bearing the great “burden” of the positive course of the budget.

At the same time, it should be noted that according to the Ministry of National Economy and Finance, part of the difference in tax revenue collection of EUR 647 million was taken into account in the 2023 financial result and the amount of EUR 2.323 billion. Euros related to the postponement of transfer payments to OKA in the amount of EUR 1.693 billion, as well as costs related to equipment programs in the amount of EUR 630 million, does not affect the result in financial terms.

Excluding the above-mentioned amounts, the overshoot in the primary surplus of the State budget for the period from January to July amounts to 1,058 million euros.

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Tax picture

But what is the tax revenue picture for the budget? Tax revenues amounted to €36,993 million, an increase of €2,317 million or 6.7% compared to the target set in the preliminary report for the 2024 budget, which is also due to the high and wide accuracy that covers citizens’ income for more than 3 years. According to the Ministry of National Economy and Finance, this overrun in implementation is the result of the better performance of income taxes for natural and legal persons for the previous year, which were collected in installments until the end of February 2024 (it is worth an estimated €647 million included in the financial result for 2023), as well as the better performance in tax collection for the current year. The surplus in tax revenues calculated financially in 2024 therefore amounts to €1,670 million.

How does net income appear?

Furthermore, it should be noted that in the period January-July 2024, the net revenues of the State Budget amounted to €39.205 billion, representing an increase of €881 million or 2.3% compared to the target set for the corresponding period. In the preliminary report of the 2024 budget, although the preliminary report target included: a) the collection of €1,797 million in March from the Recovery and Resilience Fund (TAA), of which most, i.e. €1,687 million was collected in December 2023 and an additional €159 million was collected in January 2024 and b) the collection of the price of €1,350 million in June from the Service Concession Agreement for the financing, operation, maintenance and exploitation of the Egnatia Motorway and the three (3) vertical road axes signed on 29.03.2024 and the completion of the next steps of the process until payment of the price is expected in the coming months.

Impact of tourism

The catalyst appears to have been the impact of tourism combined with indirect taxes in July. As the figures show, tax revenues amounted to €7,794 million, up €1,059 million or 15.7% on the budget target, mainly due to better performance in the collection of personal and corporate income taxes in the 2023 fiscal year. It should be noted that most of what led to the question, as mentioned above, was foreseen in the targets of the Stabilization Program according to the Ministry of Finance. Total revenue receipts amounted to €674 million, up €123 million on the target (€551 million).