The final budget performance data for January-July confirmed a significant excess of €4.2bn in tax revenue, albeit at a lower level than the provisional figure of an excess of €5.1bn. At the same time, however, a new natural gas price increase of more than 300 euros per MWh has reduced the available fiscal space that the government is betting on for TIF incentives.

Yesterday’s data from the Ministry of Finance on budget execution on a modified cash basis showed that the state budget’s primary deficit was 1.1 billion euros, against a target of 5.8 billion euros, which was included in the budget report. , as expected ten days ago according to preliminary data.

Net income exceeded target by €4.8bn thanks to an unbudgeted ANFA collection of €644m and an excess of the repayable advance reserve by €636m (including due to debtors rushing to pay a lump sum amount, and most of it was calculated in installments).

New increases in natural gas prices are shrinking the fiscal space available for incentives.

Tax revenues were €30.1bn, up €4.2bn or 16.3% over plan, with ENFIA being the main protagonists, which were paid earlier, so the excess (by €1.2bn) is temporary, as well as income tax (increased by 1 billion against the target) and VAT (increased by 1.1 billion euros). Only social security revenues are reduced by 192 million euros.

According to the Ministry of Finance, the overflow of tax revenues is due “to the extension of the deadline for payment of tolls until the end of February 2022, with a higher implementation of last year’s taxes, which were collected in installments until the end of February 2022, in order to improve tax collection performance in this year, as well as the collection of the first three ENFIA contributions in May, June and July, while it was predicted that they would be collected in September, October and November, respectively.”

In particular, in July, tax revenues were increased by 636 million euros compared to the plan (temporarily the excess was estimated at 1.6 billion euros), while the excess was mainly on income tax amounted to 308 million euros, and on property tax – 193 million Euro.

In the meantime, a new increase in natural gas prices sounded the alarm in the Ministry of Finance again. Calculations are currently leaning towards an estimate of the cost of electricity subsidies in the second half of €2bn from the budget, nullifying the available fiscal space, unless that figure ends up being higher based on second quarter GDP data. to be published on September 7th. This is because the price of natural gas shows no signs of falling, so the support bill will be significantly reduced in the coming months compared to September, which is estimated to be a peak month with a cost of 800 million euros. state budget.