During January-October 2011 the budget incomes have grown by 9.8% (61.3 billion drams) compared to the same period of the previous year. Taxes and duties have grown by 9.9% (48.6 billion drams). This information was published by the ministry of finance.
Generally 93.1% of the budget inflow was provided by incomes, duties and social payments, 5% by other incomes and 1.8% by official grants. During January-October 2011 over 540.1 billion drams was paid to the budget as taxes and duties, which is equal to 82.6% of the annual program. As it is mentioned above, the overall tax incomes have been increased by 9.9%. All types of taxes have grown in the amount. However, the highest growth was registered in the line of income tax as during the first ten months of the year it was more by 29% (18.8 billion drams) compared to the same periodof the previous year (83.7 billion drams). The income tax portion has grown too (by 8.7% / 5.3 billion drams). In the reporting period over 66 billion drams income tax has been paid to the state budget, which was equal to 12.2% of the overall taxes and duties. Even though the capacity of direct taxes was high, the biggest portion of tax incomes was provided by indirect taxes, especially the VAT.
Half of the taxes and duties paid to the budget was provided by VAT, which was equal to 270.3 billion drams, which was more by 8.2% than the capacity in the previous year. 63% of the incomes generated from VAT were resulted from customs payments. Only the fixed tax payments declined from the positive dynamics (by 6.6%). The ministry of finance informs that the reason is the fact that many businesses have decided to be taxed by the general tax rules rather than this type of tax.
This was all about taxes. However, increased tax incomes do not mean anything yet if such data is discussed without other economic indicators. The economic information sources were full of information during the past days, as well as the national statistics services (NSS) have published information about macroeconomic indicators.
The official statistics does not published GDP calculations anymore. Instead of the GDP this service calculates the indicator of economic activity (IEA), which can be identified with GDP. Ten days ago the NSS published the IEA indicator, which is higher by 2.6% than in the past year. The media related to this indicator scrupulously because the monthly indicator of the past months was ranging around 9%. In order to have a general picture about the economy, we should have the indicators for the entire period. This information was published by the statistics service recently. During January-October of this year the indicator of economic activity (or, in other words, the economic growth rate) was 5.9%. Quite not bad. This rate is quite high compared to the planned level for this year, thus the government has a reason to praise its policy. If we compare the tax incomes with the IEA, again the results are not bad. It turns out that in case of 5.9% economic growth the tax incomes have grown by 10%. One of the main goals of the government was the provision of higher level of tax incomes, i.e. the taxes should be more in order to raise the relation between the tax capacity and GDP. If the government wants, it can explain this achievement as a struggle against the shade in the economy.
However, notwithstanding the above there is another indicator reported by the statistics services, which does not let us be happy with the above. The mentioned rate is about the consumption index or inflation. According to the report of the NSS, the index of consumption prices in November compared to the same month of the previous year was 4.8%. In other words, this is the 12-months inflation index, which permitted levels are established by the budget. However, this indicator does not show the general picture of inflation during the entire year but for a certain period. For this purpose we have to compare the inflation indices for the first 11 months of the year. According to the NSS, this indicator for the year was 7.9%. This means that the inflation level for the year is 7-8%.
Now let’s go back to taxes and see where the taxes were generated from, especially the VAT, which provided most of the tax incomes to the budget. Logically the VAT is originated from the sale of products and the higher the prices of products are, the more VAT will originate. However, if even the real capacities of consumption do not change, it is possible to increase the tax income capacity by several percents as a result of inflation only. This means that the increased tax inflows to the budget were mainly a result of inflation, which means that the government is interested in inflation to show more tax collection data. By the way, in the budget draft for 2012, where it is planned to collect more 101 billion, most of these increased tax capacities will be a result of inflation. By increasing prices of products during the year it is possible to collect much more taxes. And in the end of the financial year the government may give some trouble to wholesalers by resisting the level of inflation, and after that leave the process go again and think that the job has been done. This is what is going to happen this year.