Tax revenues surge by over €900m

Tax revenues surged by more than €900 million in the opening months of the year as the Government took the benefit of the recovery in employment and consumer spending.

Exchequer returns for February also point to lower welfare expenditure as the job creation improves and a reduction in the cost of servicing the national debt.

The budget deficit at the end of February was €205 million, compared to €1.68 billion one year ago.

“The reduction on the exchequer deficit is driven by increased tax receipts, reduced net voted expenditure and earlier full repayment of loans from the exchequer to the social insurance fund,” said the Department of Finance.

The department said the State collected €6.74 billion in taxes in January and February, an increase of €925 million or 15.9 per cent on the same period in 2014 . The overall return was €345 million or 5.4 per cent ahead of the target set out in the October budget .

The figures, released this afternoon, show that the Revenue collected €2.89 billion in income tax in the first two months of the year, €183 million or 6.8 per cent more than one year previously. The return in February was €91 million or 7.1 per cent ahead of target.

The improvement in income tax returns follows separate data last week which indicated that the rate of unemployment is on course to drop below 10 per cent this year.

As recovery gathers pace in the motor industry, the latest exchequer returns reflect a €330 million or 16.2 per cent increase to €2.37 billion in VAT revenues in January and February. VAT receipts in February were €40 million or 11.3 per cent ahead of target.

On the spending side of the returns, net voted current expenditure declined by €241 million or 3.5 per cent to €6.56 billion in the first two months.

“The most significant reduction was in the Department of Social Protection where a year-on-year reduction of €238 million was recorded,” said the Department of Finance.

The cost to the exchequer of servicing the national debt in January/February was €591 million. Stripping out exceptional payments in 2013, debt servicing costs were down €128 million or 17.8 per cent on the same period last year.

“This is primarily due to lower bond interest resulting from the maturity of the 4 per cent Treasury Bond 2014 in January 2014. Interest expenditure at end-February 2015, at €560 million was marginally below profile,” said the Department of Finance.

The returns for the first two months show that the State collected €265 million in corporation tax, €174 million more than in 2014 and €165 million ahead of target. The Department of Finance said some €50 million of the corporation tax return in January and February related to once-off payments.

Excise duty returns reached €778 million in the first two months, a year-on-year increase of some €130 million or 20.0 per cent. “Receipts in respect of Excise duties for the month of February amounted to €390 million, which were €52 million (15.3 per cent) above profile,” said the Department.

Stamp duty receipts reached €152 million in the first two months, up by €45 million or 42 per cent on the same period in 2014.

Local property tax receipts to end-February stood at €115 million, up €58 million in year-on-year. “This is due to a change in payment deadlines,” said the department.

Capital gains tax, capital acquisitions tax and customs return were down a combined €10 million or 7.3 per cent in the first two months, but ahead of the budget day target by €4 million or 3.3 per cent.

The returns include €316 million in non-tax revenues, representing a year-on-year increase of €53 million or 20.1 per cent “primarily driven by increased dividends in connection with the state assets disposal programme”.

Overall net voted expenditure for end-February came in at €6.88 billion, down €172 million or 2.4 per cent year-on-year.

Net voted capital expenditure €324 million, embracing a year-on-year increase of €69 million or 26.9 per cent which was driven by increased capital expenditure in the departments of defence, jobs and education.