Corona to shrink state’s tax income by 5.6% in this year

The state's tax income this year is estimated to drop by 5.6% (€1.6 billion) year-on-year to €27.4 billion, stated the Finance Ministry's Institute of Finance Policy (IFP) on Tuesday. Even though these figures are better than those estimated in April, the coronavirus-induced economic decline and legislative measures adopted in 2019 will take their toll. The deepest tax-income slump, by 27% y-o-y, is expected in regard to companies (the drop in 2009 was 24%). VAT income is estimated to fall by 7% y-o-y, which corresponds to the current decrease in household consumption. The forecast does not indicate any reoccurrence of the 2009 scenario, which saw a 9% fall in VAT income, while household consumption remained more or less unchanged. "A possible second wave of the pandemic and a deepening of the recession represent the key risk for tax incomes," said IFP director Eduard Hagara.