Hole in stare coffers deepens

First Published:

11/03/2010 06:39:21

The hole in the state coffers from the economic recession becomes deeper and deeper and Cyprus has to face the biggest deficit of the past decades. The latest figures show that the state revenues continue to fall, rejecting the Finance Ministry’s expectations for recovery. According to them, in February 2010 the state collected €34.5 million or 18.8% less from indirect taxes. The total revenues stood at €149.2 million from €183.7 million in the corresponding month of 2009. This decline is partly linked to last year’s high base, since February 2009 was one of the two months that revenues recorded an annual increase. It is also attributable to the ongoing downturn in consumption and boosts forecasts that economy will continue to shrink in the first quarter of the year. In the first two months of 2010, the total Customs Department revenues fell by €43.4 million to €294.8 million from €338.2 million in the corresponding period of 2009. Similarly, the VAT revenues decreased 20% to €111.6 million from €139.5 million last year, the highest since May 2009. The revenues from the vehicle taxes fell to €10.3 million against €17.5 million last year despite expectations for a recovery in demand after the Motor Show. The smoking ban since early 2010 possibly explains the drop in the collection of tobacco taxes to €27.9 million from €28.5 million last year. The indirect taxes are 50% of the total state revenues. The figures on direct taxes have not been published yet. The Ministry hopes that the indirect tax revenues in 2010 will show an increase of 2.9% and the direct taxes will increase by 4.7%. Even with this optimistic scenario, the deficit is expected to reach 7% in 2010 against 6.1% in 2009.

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