Cyprus tax receipts decline in January

Cyprus indirect tax receipts for January 2010 excluding VAT continued to decline, with the January decline at 13% year-on-year to EUR 27.2 mln while total receipts including VAT fell by 5.9% YoY to EUR 145.3 mln according to the Department of Customs and Excise.
VAT receipts, which constitute the biggest part of indirect taxes receipts (c.75-80% of the total), recorded a 4.1% decrease reaching EUR 118.13mln in January. Excise duties receipts fell by 21.2% to EUR 2.51mln amid lower import demand, whilst total consumption tax receipts decreased by a further 12.1% yoy to EUR 24.68mln primarily due to consumption tax receipts on motor vehicles. Notably the only increase in consumption tax receipts came from tobacco (+3.25% yoy) at EUR 18.16mln.
Marfin CLR Research said the data constitute the first indication of a continuation of 2009’s negative trend in private consumption demand, despite the low base of January 2009. We recall that in January 2009 total indirect taxes receipts (including VAT were down by -4.1% yoy and VAT receipts by -3.7% yoy.
The negative trend is deducting from GDP figure as it shows the deteriorating consumer spending behaviour which constitutes the biggest component of GDP (c. 70%). The above continues to put further pressure on fiscal economics as indirect taxes receipts constitute c. 50% of total government receipts concluded Marfin CLR Research.