How Belarus' Budget Revenues Are Melting

Revenues fell by a quarter.

Despite the increase in the tax burden, practiced by the authorities in recent years, the republican budget revenues are declining. This is especially noticeable in 2021.

According to the Ministry of Finance, in the first quarter of 2021, republican budget revenues amounted to 15.5% of GDP. For comparison, in the first quarter of 2018, republican budget revenues amounted to 20.5% of GDP. It turns out that, in just four years, the republican budget revenues decreased by 5 percentage points or a quarter in relation to GDP. Moreover, the most significant reduction occurs precisely in 2021 (by 2.5 p.p.), when the VAT on medicines was introduced and, it would seem, the republican income should increase. After all, VAT forms almost half of the revenue side of the budget.

What funds has the Belarusian budget lost?

Back in 2018, tax revenues formed 81.9% of the republican budget. In 2021 - already all 90.3%. It turns out that, despite the increase in the tax burden, which in itself is bad, the state still loses money. Why?

The main source of growth in the share of tax revenues to the budget was VAT, the share of which in tax revenues increased from 45.8% in 2018 to 50.9% in 2021. We are comparing now for the first quarter, but it is unlikely that there will be strong discrepancies at the end of the year.

In the first quarter of 2018, tax revenues gave 4.18 billion rubles to the budget, in the first quarter of 2021 - 5.077 billion rubles. It looks like good growth, but, taking into account how much the Belarusian ruble has depreciated, it will still be a minus. In terms of the dollar exchange rate, tax revenues to the republican budget amounted to $ 2.147 billion in the first quarter of 2018 and $ 1.941 billion in the first quarter of 2021.

The reduction in tax revenues can be associated both with the current crisis, when in a pandemic, people simply began to spend less (they buy less, less VAT goes to the budget), and with the political situation in the country, when the head of the NAU Pavel Latushka asks the Belarusian people almost every day to hold back their spending so as not to feed the regime with VAT. One way or another, it can be stated that the introduction of VAT on medicines did not contribute to an increase in the republican budget revenues. Moreover, they have even decreased.

Another significant part of the republican budget was the so-called gratuitous receipts. It was they who decreased the most - they practically disappeared. Gratuitous receipts are mainly receipts from foreign states and international organizations. In the first quarter of 2018, the republican budget received 509.5 million rubles under this article. This is almost 10% of all receipts to the republican budget.

In the first quarter of 2021, gratuitous receipts amounted to only 33.4 million rubles or about 0.6% of all receipts. Just like that, in an instant, the republican budget immediately became impoverished by 9%. Further, given the current political situation in the country, it will be even worse.

Non-tax revenues (payments for the use of state property and the provision of state services) also decreased from 630.5 million rubles to 509.6 million rubles. In the first quarter of 2020, these receipts amounted to 766.8 million rubles altogether, but then (most likely due to the loss of popular confidence by the state), they simply began to use significantly less public services and state property. Add here the exchange rate difference, and it will become clear that here, too, the budget suffered very significant losses.

In general, if we evaluate the results of the authorities' activities, then there is a stable feeling that they are doing everything to keep the revenue side of the republican budget further reduced. Of course, you can once again try to fix the situation by increasing the VAT on medicines to the national level, but it will hardly help. The trend is too obvious: the more sheep are sheared, the less wool they grow.

Aliaksandr Nadzishyn, Ezhednevnik