The sharp increase in tax revenue was due to the economic recovery from the Covid pandemic and the pre-crisis level was exceeded in most areas of activity already in the first half of last year, commented Rait Kiveste, an analyst at the Ministry of Finance's Fiscal Policy Department.
The tax debt also decreased by 38 million last year. The payments of the second pension pillar and accelerated inflation, which gave a strong impetus to the increase in tax revenue in the 3rd quarter, also had a significant impact, Kiveste added.
Revenue from personal income tax increased by 29.9 percent during the year. Revenue from corporate income tax increased by seven percent year over year, despite a 34 million decrease in corporate income tax.
A total of 2.88 billion euros was paid in VAT during the year, which also exceeds the 2019 level by 394 million euros. VAT revenue increased strongly in 2021 compared to both 2020 and pre-crisis 2019, by 17.9 and 15.9 percent, respectively.
The growth of VAT revenue in 2021 was rapid, mainly due to the faster-than-expected economic recovery and the money taken from the pension pillar, as well as the gradually accelerating price growth, Kiveste noted. The payment of VAT was boosted by an accelerating price increase, which reached 12.2 percent in December due to the peak in energy prices.
Payment of excise duties increased by 9.4 percent compared to the previous year. According to Kiveste, the payment of excise duties was generally expected, but the budget for alcohol excise duty was not fulfilled in the expected amount, mainly due to the pandemic. Nevertheless, the payment of alcohol excise duty reached the level of 2019.
Payment of fuel excise duty remained as expected until the end of the year, despite high retail prices, Kiveste noted. During the year, the average retail price of diesel fuel increased by 12 percent and the average retail price of gasoline by 14 percent. Retail sales of motor fuels increased by 7.4 percent over the year.
Source: Ministry of Finance, ERR
