VAT revenue was down 1.8%, because of VAT refunds, the Finance Ministry says.
Economists, however, say the VAT refunds were not the problem, the poor VAT collection, despite rising consumer spending, was.
“VAT collection was really poor considering retail sales went up, which I think is a major weakness in the budget revenue collection. We warned that the VAT revenue projections were very optimistic,” said Ionut Dumitru, chairman of the Fiscal Council.
The consolidated budget overall revenue stood at 31.5% of the gross domestic product in 2014, 1.2% of GDP lower than scheduled, while spending reached 31.6% of GDP, 1.5% of GDP lower than planned. Total revenue therefore stood at RON213.8 billion and spending at RON226.3 billion. The RON12.4 billion deficit (1.85% of GDP) was mostly accumulated in December, considering January-November deficit stood at 0.04% of GDP.
“The deficit went down within the agreed targets but revenue remains really weak. Revenue stands at 31.7% of GDP, which means very poor collection,” economic analyst Dragos Cabat commented.
The lower deficit, he says, was because of the spending cuts in the area of co-financing for EU funded projects and of the decline in capital expenditures. Revenue increased as a result of the excise duty on oil products and the rise in the minimum wage, which entails higher taxes but that is strictly an accounting thing, one takes something from one pocket and puts it in another. The increase in the VAT refunds was because some of the amount was overdue, Dragos Cabat added.
(English version by Loredana Fratila-Cristescu)