OE2019: the weight of the main measures on state revenue

  • ECO News
  • 16 October 2018

How much does the end of the PEC programme cost? What about the relief in electricity bills? And how much is the state planning to spend on increasing pensions?

The state budget for 2019 shows that revenue will suffer a €21m negative impact, and state expenditure will be hit by a hefty amount of €292m. There are many new measures planned for this year’s state budget. However, many are already well-known.

In the State budget proposal, we can see how much each measure, negotiated by each party, will cost (as for instance the decrease in the VAT tax from 13% to 6% for cultural events – which will mean a €9m loss for state revenue) or the decrease in the VAT for electricity and natural gas, which represents a loss of €19m for the state’s income.

On the negative impact side, the biggest issue is coming from past measures, which will still have an effect on 2019’s accounts.

The tax return surcharge (IRS surcharge) will have a €144m weight and so will the IRS income scales ( €155m). These impacts will only be witnessed in 2019 because the tax withholding charts weren’t accurately calculated, leaving parts of the tax relief to be part of next year’s balance of sheets.

The end of PEC (Special Account Payment), will also negatively affect state income by €100m.

On the expenditure side, the main positive factors are the savings from the public debt (-€191m) and a section called “revision of expenditure exercise”, which alleviates expenditure by -€236m.

Aggravating expenditure, the “net effect of career progression” for the government employees is one of the highlights, alongside three measures targetting the retired employees:

  • an extraordinary increase for pensions to guarantee a minimum 10 euros increase starting January (€137m)
  • an additional value for pensions (€26m)
  • and the new rules for early retirements (€66m)