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Estonian budget surplus widened in January

15.02.2010, 14:59

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Estonia’s central government budget surplus widened in January from a year earlier, helped by stock- building of alcohol, tobacco and fuel ahead of tax increases, reports Bloomberg.

Revenue exceeded spending by 1.8 billion kroons on a cash basis, State Treasury said in a statement on the finance ministry website. In January 2009, the surplus was 246 million kroons, according to ministry data.

Alcohol, tobacco and fuel tax receipts in January totaled 19%, 43% and 15% of the annual plan respectively, the ministry said on Feb. 5, citing the stocking up of goods in December ahead of tax increases.

The minority government of Prime Minister Andrus Ansip aims to reduce the overall deficit, which includes central government, local government and social insurance funds, to 2.2% of gross domestic product this year from an expected 2.6% of GDP in 2009. The government wants to convince the European Commission that its cuts are sustainable to ensure euro entry in 2011.

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A bit misleading:
"Revenue exceeded spending by 1.8 billion kroons on a cash basis"

I think they are referring to cash-basis accounting. So in December, shops stocked up on alcohol and tobacco before the new taxes take effect in January. However, the taxes collected for December aren't paid to the government until January (generally on the 10th).

But... don't governments use accrual and not cash-basis accounting? So this revenue is actually booked as part of December's revenue?

In some ways, this may actually be a bad thing. Retailers have stockpiled a 6-12 month supply of these goods, so the government won't be receiving much tax money for those goods over the coming months as it was already paid for December.

~ameeriklane [16.02.2010, 12:46]

yes, you are right! I just try to say, that this crisis might affect the estonian "wish" to get the euro zone, because from now the german and the french might start thinking more than 3 times before to accept a new member into the club, specially estonia; a country without a strong (or acceptable) economy... I don't think that they would be happy if estonia start to have problems in further years..

~piummmmm [15.02.2010, 20:32]

what a miracle??? really I am amazed !

when you don't spend money (cutting budget in everywhere) is for sure that you should be able to have more money!

and now the want euro.. hahahaha... just look at the situation with greece... you will get your answer!

~piummm [15.02.2010, 19:54]

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