Budget 2015, revenues increase

Top Channel published the preliminary draft of the budget 2015, which will soon be approved. They say that the total revenues will increase from 367.9 billion ALL to 410.9 billion ALL in the next year. The government says that most of the growth, almost two thirds, come from the fight against tax evasion, while 13 or 15 billion ALL will come from a direct tax increase.

But what will the citizens pay more? The draft says that there are four taxes that are expected to bring more revenues: VAT, from which the government expects 9.5 billion ALL more, due to the fight against informality and tax evasion; the excise and personal income tax, from which the government expects 7 billion more each. From the National Tax, the government expect 8.5 billion ALL more. The excise and the income tax will increase in the next year for cigarettes, rents and fuels.

These are the changes from the revenues. As for the spending, the government will be more careful. The draft says that the total spending will mount up to 469.9 billion ALL from 456.4 billion ALL that were seen this year. All this growth will be used for current spending, especially payments for the debt interests, which has increased with 13 billion ALL. As for investments, the government will cut the spending again, but with 1.5 billion ALL.

Debt starts to decrease

The preliminary budget draft shows that next year, the fiscal policies will enter a strong round of consolidation. The budget deficit will decrease from 6.4% of the GDP to 4%. This means that in 2015, the Government’s space for taking debts is narrowed with 2.3%. But how will this correction be compensated? Figures show that most come from the revenues. The government is committed to increase the revenues with 1.5% and the spending will consolidate the remaining part of 0.8%.

But this policy raises two questions. First of all, the objective for collecting 43 billion ALL more seems ambitious, especially when most of it is expected to come from the fight against informality. The government has started some operations against tax evasion and informality, but the reaction of the IMF remains to be seen. Usually they have been restrained towards optimistic programs.