The first ten months of the year have yielded 96 percent of the state budget's income target, up 5.7 percent on year. Increased tax revenue came mainly in the form of income tax from people leaving the second pension pillar.

Labor taxes affected by rapid salary fund growth

Growth of salaries slowed to 9.4 percent in October. Both growth of average salary and vacant jobs slowed – to 6.1 and 3.2 percent respectively. The salary fund growth was fastest in IT and communications (20.1 percent).

Social tax receipt was up 8.7 percent on year. Social tax deficit shrank by €1 million to €74 million and has fallen by €9 million since the start of the year.

Natural persons income tax receipt grew by 164.1 percent in October on year after extra revenue of €283 million. This revenue was not counted on in the 2021 state budget as the Supreme Court had not ruled on the constitutionality of the reform yet. That is why natural persons income tax receipt exceeded forecasts by 205 percent.

Price of motor fuels holding back consumption

Excise duty receipt grew by 5.1 percent on year and has grown by 9.7 percent over the first ten months of the year compared to 2020. Revenue from alcohol excise duty grew by 17 percent.

Receipt of the excise duty on motor fuels has slowed in recent months, with growth at just 1 percent y-o-y in October. Motor fuels price hike has caused consumers to prefer cheaper E95 gasoline (sales up 4.5 percent) over gasoline E98 (down 14.2 percent).

Growth of excise duty receipt on diesel fuel has slowed.

Total motor fuel sales grew by just 0.5 percent in October year-over-year, having grown 7.2 percent over the first ten months of the year.

VAT receipt improving

Increased economic activity, price advance and withdrawn pension assets are also reflecting in VAT receipt.

VAT revenue grew by 17.6 percent in October, which is 4 percent faster than the average growth over the last three months. Receipt of the first ten months (€2.29 billion) exceeds the 2019 level (+13.6 percent vs 2019) by €274 million.

VAT receipt is growing rapidly courtesy of inflation picking up speed, hitting 7 percent in October. It is estimated that around 20 percent of all second pillar money withdrawn has ended up in consumption, with 60 percent remaining on bank accounts.

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