Montenegro's budget proceeds increased 8.6% y/y to EUR 501.6mn in the first six months of the year lifted by higher inflows from VAT, social contributions and excise duties, according to a report published on the government’s website. The H1 budget revenue exceeded the EUR 496.5mn target for the period.
The VAT proceeds climbed 12.3% y/y to EUR 183mn over the period, likewise exceeding the initial plan by EUR 170.7mn. Their share in total revenue also increased to 36.4% from 35.3% a year earlier. The recent VAT hike from 17% to 19% will likely support further rise in income from VAT in the coming months.
Revenue from excise duties rose 10.7% y/y to EUR 66mn in January-June whereas social contributions went up 5.0% to EUR 157mn over the period.
Income from profit tax increased 9.4% to EUR 28mn in H1, also contributing to lift the overall budget income. Revenue from personal income tax grew by 11% y/y to EUR 37.3mn, supported by the personal income tax hike from 9% to 15% that came into effect in February.
Rising budget revenue was the result of progress made in curbing the grey economy, the government said in a statement. The statement did not disclose details on the level of budget expenditures or balance.
In July, the government approved a budget rebalance in an attempt to help insolvent aluminium firm KAP pay out its electricity bills amounting to EUR 61mn and cover EUR 102mn worth of state guarantees issued on KAP’s bank loans. The 2013 budget revision will be discussed in the parliament on August 1.
Under the 2013 budget law, Montenegro plans to halve its budget gap to 2.73% of GDP (EUR 95mn) from 5.86% of GDP (EUR 196mn) last year thanks to bigger tax revenue and improved budget revenue collection.
|Montenegro's budget income, EUR mn||H1 2012||H1 2013||Plan H1 2013||y/y, %|
|Personal income tax||33.6||37.3||36.6||11.0|
|Source: Government of Montenegro|
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