VAT raise boosts budget revenues by 17% in August

The VAT hike from 19% to 24% as of July 1st generated a 17% rise in overall revenues collected by the state budget in August, compared with the same month of 2009, pursuing the upward trend which started in June.

In August, budget revenues totalled 12.9 billion RON, with VAT collections reaching 3.6 billion RON, up 46.9% amid a tax hike by five percentage points.

The Finance Ministry explains, however, that “VAT revenues from internal operations in August 2010, uninfluenced by VAT repayments, rose by 25%, a percentage very close to the increase of the tax from 19% to 24%.”

VAT is the biggest supplier of money to the state budget, and the second biggest for the general budget, after social contributions.

“The rise in VAT collections to the state budget is a positive signal, but it is also a big sacrifice, considering the GDP contraction by 2.5% this year in Romania, while other countries have already returned to a rising trend,” said Rozalia Pal, chief-economist of UniCredit Tiriac Bank.

Over the course of the first eight months of this year, VAT and excises brought 23.3 billion RON and 10.7 billion RON respectively to the state budget. VAT revenues rose by 4.5% against the first eight months of 2009, with amounts collected from excises climbing by 11.7%.