Gov’t fails to collect Euro 140 million in taxes

TIRANA, Jan. 8 – Government revenues continued underperforming even in November 2012, reconfirming the overoptimistic projections made in the initial 2012 budget, cut under a normative act in December 2012 as government failed to collect income from strategic privatizations in the energy sector. Finance Ministry data show government collected a total of 301 billion lek in the first 11 months of 2012, up only 2 percent compared to the same period in 2011 but down 6.3 percent or 20 billion lek (Euro 140 million) compared to targets it had set, affecting public investments and the deficit.
The report reconfirms the sluggish domestic consumption as indirectly shown by the performance of the value added tax and a difficult situation among businesses which are suffering a double-digit shrink in profits.
At 53 billion lek for the first eleven months of 2012, public investments were 9.8 percent lower compared to the same period in 2011 and 10.6 percent lower compared to the 2012 targets. The budget deficit in January-November 2012 was at 35.2 billion lek, down 7.8 percent compared to the same period last year but 26.4 percent higher compared to the target.
The Finance Ministry data reconfirm the stagnation of domestic consumption, which is the key driver of the Albanian economy at a time when exports’ growth has considerably slowed down due to escalating crisis in the Eurozone and especially top trade partners Italy and Greece.
The value added tax, which accounts for around 38 percent of total tax revenues, and indirectly measures consumption, grew by only 0.5 percent in the first eleven months of 2012 but was down around 7.5 percent or 8.7 billion lek compared to the set targets. The excise tax imposed on the so-called luxury goods was down by 8 percent compared to the first eleven months of 2011, revealing that Albanians have cut down on fuel, tobacco, coffee and beer consumption in these times of crisis.
What’s worse, businesses continue suffering with the profit tax for the first eleven months of 2012, down by 15.9 percent.
The pension scheme deficit continues widening as it rose to 35.8 billion lek in Jan-Nov. 2012 compared to 32.4 billion lek a year ago.
During the first eleven months of 2012 government also spent around 38 billion lek in interests rates, up 2.1 percent or 797 million lek compared to the same period in 2011 as public debt stands at the legal ceiling of 60 percent of the GDP. Estimated at over 800 billion Lek currently, the public debt costs the Albanian government 3 percent of the GDP or 50 billion lek (euro 357 million) in interest payment annually.
Privatization revenues reached 888 million lek, more than double compared to the first eleven months of 2011.
An expected staggering amount of Euro 850 mln from the privatization of oil firm Albpetrol postponed government plans to review downward its overoptimistic revenue target of a 7.8 percent growth rate.
Under a normative act approved last December, government cut budget for the third year in a row after failing to meet its meet its overoptimistic targets. For 2012, government cut spending by 15.8 billion lek (Euro 111 million) to 381 billion lek and revenues from 355.7 billion lek to 332.7 billion lek. The budget cuts come after government increased wages and pensions by an average of 5 percent last July.
For 2013, government expects the Albanian economy to grow by 4 percent compared to an average forecast of 1.5 percent by international financial institutions.