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Salary increase "saves the budget" income in January expands by 8%

2024-02-23 15:22:00, Ekonomi CNA

Income from payroll taxes is driving most of the annual revenue growth. In January 2024, budget revenues reached 54.3 billion ALL with an annual increase of 4 billion ALL or 8 percent more than January of last year. Nearly 66% of the increase came from payroll taxes such as social security, health insurance and personal income tax.

Income from social security reached 14.7 billion ALL in January, with annual growth of 17.8% (+1.9 billion ALL). The effects of the increase in insurance income end in April of this year, as the last increase in the minimum wage was applied in April 2023, at the level of 40,000 ALL, from 34,000 ALL before.

Revenues from major taxes were also up. Revenues from VAT in January reached 18.3 billion lek with an increase of 7.8%, Revenues from profit tax had the strongest growth. Receipts in this item reached 2.8 billion ALL with an annual increase of 19.3 percent. Collections also increased in the item of excise duties by 4.8 percent compared to last year.

Sources from the Ministry of Finance claim that the month of February also saw a good performance of income compared to last year. This has prompted the government to apply changes to the 2024 budget as early as the second month of the year.

On the other hand, budget expenditures were much lower than revenues. During January, the government allocated as expenses from the state budget 38.5 billion ALL, causing the budget balance to result in a surplus of around 15 billion ALL in January 2024. Budget expenditures were 9.1 percent more than the fact of January 2023.

In recent years, the budget has been characterized by revenue growth fueled by higher card prices after the war in Ukraine and by rising wages, from which more taxes have been collected. In terms of spending, the government has followed a more moderate policy, concentrating them in the last two months of the year and mainly in December. Last year, almost 25 percent of the total budget was allocated in December, while 38 percent of the capital investment fund was allocated in this month.

The increase in revenue has helped the government reduce public debt more than projections. Last year, public debt reached 59.2% of expected GDP, falling by over 7 percentage points within the year.

The International Monetary Fund and the World Bank have called on the government to increase investments in human capital as the country is in a demographic crisis, when births are falling, young people are emigrating and the workforce is aging rapidly./ Monitor Magazine