Analysis: Exchequer returns should mean a solid start for 2015

There will have been bated breaths in the Department of Finance waiting for the November tax returns, with the key self-employed income tax returns to be counted.

The latest figures show that the trend we have seen in recent years of the figures coming in ahead of target is continuing. The target of reducing borrowing to 3.7 per cent of GDP this year – revised down from the original estimate of 4.8 per cent made last December – should be comfortably met.

In turn this leaves a solid start for 2015.

Tax revenues in November just nudged 0.6 per cent ahead of the expected monthly figure. The overshoots earlier in the year were greater.

However the self employed tax returns for November were 2.7 per cent ahead of expectations and the general pattern of the returns is positive, with VAT and corporation tax receipts also above expected levels so far this year, though the trend in both was a little weaker in November. The stronger property market is given the exchequer a boost through a rise in stamp duty.

Adding all taxes together, receipts in the first eleven months were €1.127 billion, or 3 per cent, ahead of target and up 4.1 per cent on the same period last year.

When reduced payments on the national debt and an increase in the Central Bank surplus income are counted in, the total deficit is now more than €1.8 billion lower than expected when the budget was written last December. The total deficit for the first eleven months was €5.759 billion.

On spending it is the same old story, with health spending running ahead of expectations, largely made up for by savings elsewhere.

The total overspend in health in the first eleven months was €580 million. This has left state day-to-day spending running 1 per cent above the forecast level. However state investment spending, while running ahead of last year, is again below target.

The figures show that the government is comfortably on target to meet the 3.7 per cent deficit figure predicted in the October budget, with an undershoot looking likely.

This will give Minister for Finance Michael Noonan and Minister for Public Spending Brendan Howlin some leeway moving into 2015.

However with taxes now running just a little ahead of forecast, a similar large undershoot of the budget target for 2015 may not be on the cards. Of course a lot can happen in a year, but for next year the government would probably be happy to come in on target.