Fourth supplementary budget and amendment to 2011 budget proposal: key figures
With the fourth supplementary budget proposal, central government net lending needs in 2010 will be reduced by EUR 710 million to EUR 11.3 billion. According to the amendment proposed to the 2011 Budget, central government net lending needs in 2011 will be down by EUR 330 million to EUR 8.0 billion. As a result central government debt in 2011 would increase to EUR 84 billion and to 45%of GDP.
According to national accounts figures out in September, central government will run a deficit of 4.3% of GDP in 2011. General government net borrowing, the EU comparable deficit figure, will stand at 1.4% of GDP in 2011. This is expected to be one of the lowest deficit figures in the whole euro area.
Fourth supplementary budget proposal for 2010
Cuts amounting to EUR 0.7 billion are proposed in government on-budget expenditure for 2010, reducing total spending decisions in the year to EUR 51.7 billion. In particular, appropriations set aside for refinancing operations by Finnish Export Credit Ltd have been noticeably reduced. The proposed level of appropriations falls within the spending limits for the government term.
It is proposed that the on-budget revenue estimate is lowered by EUR 25 million from budgeted figures. The net estimate for tax revenue is lowered by EUR 375 million. Although earned income and capital revenue have been rising during the current year, it is proposed that the estimate for central government revenue from earned and capital income be lowered by EUR 500 million. This adjustment is mainly in response to the preliminary data received on completion of the 2009 tax assessment, which show that the economic crisis reduced central government revenue from earned income and capital income in 2009 more sharply than previously estimated. As a result it is expected in 2009 and 2010 central government will lose some EUR 450 million through changes in tax revenue apportionments while the share of other tax beneficiaries will increase accordingly.
The corporate tax revenue estimate is lowered by EUR 172 million primarily on the basis of data received on completion of the 2009 tax assessment.
Stronger household confidence and the recovery of the labour market are spurring the growth of private consumption, which is reflected in accrued indirect tax revenue. Indeed it is proposed that estimated VAT revenue is increased by EUR 127 million. Estimated revenue from the motor car tax is raised by EUR 108 million, since sales and imports of second hand cars has increased more than anticipated. Compared to the 2010 ordinary Budget, revenue estimates (excluding the use of cumulative surplus) have been revised upwards by a total of EUR 1.7 billion over the year.
Proposed amendment to 2011 budget proposal
The proposed amendment to the Government?s ordinary budget proposal for 2011 includes an increase of EUR 0.2 billion in appropriations, bringing the sum total of 2011 appropriations to EUR 50.5 billion. The single biggest increase in the proposed amendment comes from the setting aside of funds for capital investment in universities established as independent corporations under public law. The proposed level of appropriations falls within the spending limits for the electoral term.
It is estimated that in 2011 net on-budget revenue will increase by EUR 528 million more than forecast in August. This is primarily attributable to an increase of EUR 355 million in estimated VAT revenue and an increase of EUR 130 million in estimated revenue from dividend income and from sales of stocks. Estimated car tax revenue is increased by EUR 25 million as a result of higher than forecast imports of second hand cars. By contrast the estimate for corporate tax revenue is lowered by EUR 59 million. The level of corporate tax revenue will remain lower than forecast in 2009, and it is expected that this will be reflected in tax revenue over the following years.
On-budget balance in 2010 (EUR million)
|
2010 budgeted |
2010 fourth supplementary budget proposal |
2010 total |
Revenue |
40,499 |
-25 |
40,473 |
Expenditure |
52,482 |
-738 |
51,744 |
Actual deficit |
11,983 |
-712 |
11,271 |
On-budget balance in 2011
|
2011 budget proposal |
Amendment to 2011 budget proposal |
2011 proposal |
Revenue |
41,928 |
528 |
42,456 |
Expenditure |
50,269 |
199 |
50,468 |
Actual deficit |
8,341 |
-330 |
8,012 |
Inquiries: Hannu Mäkinen, Director General of Budget Department, tel. 358 9 160 33036 and
Juha Majanen, Director of Fiscal Policy Unit, tel. 358 9 160 33246