The Tax and Customs Board (MTA) took in €1,05 billion in tax revenue in July, up 12.5 percent year-over-year.

"VAT receipt was affected by strong economic activity and a new price advance peak that rendered consumers more cautious," the Ministry of Finance said. "On the one hand, inflation is adding to VAT receipt, while it is also reflected in consumer confidence heading down."

The first seven months have yielded €1.84 billion, which is 19 percent or €294 million more than in 2021.

Growth of the total turnover of Estonian companies (18 percent) slowed by 9 percent compared to the monthly average of the first six months, courtesy of stronger second half-year reference base. But turnover by sector did not grow as robustly as in previous months.

Retail and wholesale trade and energy affected VAT revenue the most in July, with receipt up 22 percent and 135 percent respectively.

Retail and wholesale of motor fuels was the strongest factor in commerce, with diesel and gasoline having become more expensive by 60 and 39 percent respectively on year. The price of electricity climbing 143 percent affected the energy sector.

Excise duty revenue kept down by continued slump in consumption

Excise duty receipt was down 1.6 percent in July year-over-year, with motor fuels keeping growth down.

In addition to the monthly reduction, cumulative growth is now also in the red, with excise duty revenue of the first seven months of the year down 1.4 percent compared to the same period in 2021.

If the war in Ukraine and price advance initially affected private consumers' habits and gasoline consumption, recent months have seen a reduction in diesel purchases that reflects changes in business activity. While goods carriage volumes continued to grow in Q1, a reduction of 12 percent was clocked in the second quarter. International transport is seeing especially deep decline, with volumes almost cut in half in Q2 compared to six months ago.

Turnovers are still growing in warehousing and logistics but the pace is slowing.

Falling motor fuel sale volumes are universal, with only Valga County diesel sales still heading up. The prices in the border town also compete with those in Valka, Latvia.

Sale of motor fuels was down 7.8 percent in July on year, with diesel sales contracting by 7.7 percent and gasoline by 8.2 percent.

Growth of the salary fund slowed in July but remains high historically

Salary fund growth slowed to 12.3 percent in July y-o-y. Growth of the average salary and number of jobs both slowed to 8.6 and 3.3 percent respectively.

The share of registered workers in population is at an all-time high at 62.7 percent. Salaries grew the most in accommodation and catering (33.4 percent), while the number of jobs in the sector is still falling.

Administration saw the most new jobs in July (+4,400) in connection with rental employment, with accommodation and catering coming in second (+3,800).

Social tax receipt growth slowed to 9.8 percent compared to last year for the slowest monthly increase this year.

April saw the entry into force of a Social Tax Act amendment that reduced the tax rate from 33 percent to 20 percent in some cases, costing Estonia €5 million in social tax revenue.

Continued solid individual income tax receipt (state budget and local government portions combined) still relies on strong salary fund growth. Receipt was up 18.1 percent in July year-over-year, with the local government part growing 13.2 percent.

Distributed profits growth supporting corporate tax receipt

Legal person income tax receipt grew to 30.3 percent in July y-o-y up from 24 percent in the first half-year.

The lion's share of growth came from private sector companies' distributed profits, with state company dividends also growing slightly.

Tax receipt is affected by volume of dividends and the lower 14-percent tax rate for regularly distributed profits. After the first seven months of 2022, the lower-rate income tax receipt amounts to €118 million, up €18 million since last year.

The standard 20-percent tax rate on distributed profit has yielded €158 million or €39 million more than a year ago.

The negative effect of the lower tax rate is offset by physical person shareholders' additional 7-percent income tax on dividends taxed with a 14-percent rate. Over the first seven months, this has yielded €25 million in physical person income tax or €5 million more than during the same period last year.

--

Follow ERR News on Facebook and Twitter and never miss an update!