Budget. VAT. “Still a long way to the goal”

Last week The Ministry of Finance announced that from January to July 2024 year income from VAT tax amounted to PLN 170.3 billion and were higher by approximately PLN 29.4 billion, or 20.8 percent, compared to the execution in the period January – July 2023.

“Decent data. But we are still far from the target in the budget act,” said economist and economic analyst Rafał Mundy on the X portal (formerly Twitter).

According to the plan included in the Budget Act, VAT revenues in 2024 are to reach PLN 316.4 billion.

The increase in VAT revenues in July alone was noted by Finance Minister Andrzej Domański in his post on the X. “Budget revenues from VAT were 22.4 percent higher in July than a year ago,” he wrote.

“VAT revenues in July amounted to approx. PLN 27.1 billion, i.e. +22.3% y/y, which is significantly less than the nearly 30% growth assumed for the entire year. After July, revenues are 20.8% higher y/y. In 2024, VAT revenues may be approx. PLN 15 billion lower than assumed,” commented economists from ING Bank Śląski.

“The budget amendment remains in play,” they added.

“Budget data confirms the narrative of a stronger consumer from the GDP flash reading. We are on a monotonic growth path (3% in 2024, 4.3% in 2025), and the consumption engine is accelerating,” Bank Pekao economists wrote on the X platform.

As they noted, in the case of VAT, the sum of revenues from January to July is higher by 20.8 percent year-on-year. “This is still below the assumptions in the budget act,” they added.

Budget deficit After July, it amounted to PLN 82.8 billion, or 45 percent of the plan. After June this year, the deficit amounted to PLN 69.9 billion, or 38 percent of the plan. In turn, a year ago in July, the deficit amounted to almost PLN 13.1 billion, or 19.3 percent of the plan.