Exchequer collects €545m more than expected in first quarter

Tax payments in the first three months of the year came in 5.5 per cent ahead of target as the State collected €545 million more in revenues than anticipated in budget 2015.

Exchequer returns published this afternoon by the Department of Finance show that the public finances were in surplus by €197 million at the end of March, a sum which contrasts with the €2.32 billion deficit recorded this time last year.

“Tax revenues continue to grow while prudent expenditure policy remains evident. The continuing improvement in the Exchequer position leaves us on course to achieve the fiscal target for the year,” said Minister for Finance Michael Noonan in a joint statement with Minister for Public Expenditure Brendan Howlin.

While the surplus in the first quarter marks a €2.51 billion swing in the public finances, revenues in the quarter were flattered by a large once-off transfer from the National Pension Reserve Fund.

“This transfer of €1.63 billion, relating to part of the proceeds from the sale in 2013 of the preference shares in Bank of Ireland, was used to part finance the early repayments of the IMF loan facility.”

The exchequer figures, which reflect the rebound in income tax payments and a spike in corporation tax returns, come as the Government spends less than anticipated in the October budget as welfare payments ease.

“Increased PRSI receipts and improving live register figures contributed towards a year on year reduction of €185 million (6.2 oer cent) in Social Protection expenditure,” the Department said.

The State collected €10.47 billion in tax to the end of March, up €1.24 billion or 13.4 per cent year-on-year. Overall net voted expenditure stood at €10.25 billion, down €16 million or 0.2 per cent on the same period in 2014 and down €146 million or 1.4 per cent on the expenditure foreseen in the budget.

Income tax receipts in the first quarter reached of €4.24 billion, €302 million or 7.7 per cent more than in 2014 and €136 million or 3.3 per cent more than anticipated last October. As the unemployement rate dropped to 10 per cent in March, income tax receipts for the month came in €77 million or 6.1 per cent ahead of target.

“The €302 million increase in income tax collected on the same period last year is real evidence of the number of jobs being created. This has been achieved despite the reductions in income tax and USC which I introduced in Budget 2015,” said Mr Noonan.

VAT collections, which reflect consumer spending, reached €3.8 billion in the first quarter, an increase of €431 million or 12.8 per cent on same period last year. Monthly VAT receipts in March were €16 million or 1.1 per cent above profile.

Corporation tax receipts stood at €555 million in the quarter, up €299 million increase year-on-year year and €257 million above profile. “Some of this, c. €170 million, relates to one-off unexpected payments,” said the Department.

Exchequer debt servicing costs reached €2.06 billion in the first quarter, a year-on-year increase of €83 million when a sinking fund contribution in 2014 is excluded from the comparison.

“Interest expenditure at end-March 2015, at €2.02 billion was €89 million (4.2 per cent) below profile, primarily due to lower than expected bond issuance costs this year,” the Deparment said.