Exchequer returns point to limited wriggle room in budget

Tax receipts for the first nine months of the year are still running behind target, suggesting Minister for Finance Paschal Donohoe will have little scope for surprise give-aways in next week’s budget.

The latest exchequer returns, published on Tuesday by the Department of Finance, show the Government has collected just over €35 billion in taxes so far this year, some €212 million less than expected.

The below-par performance was again down to income tax, which came in 1.4 per cent or €188 million below profile at €13.6 billion.

However, Department of Finance officials said they were confident this gap would unwind by the end of the year on foot of more buoyant income tax receipts from the self-employed in November, which are expected to reflect the recent pick-up in employment.

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The Government’s second largest tax head, VAT, was also marginally below target for the first time this year at €11 billion.

On a monthly basis, the sales tax was 6.2 per cent or €132 million below projections, which the department blamed on greater-than-expected repayments.

Officials said it was too early to tell if VAT was being affected by a pick-up in cross-Border shopping.

The exchequer data showed excise duty also came in €116 million or 2.7 per cent behind target at €4.2 billion, which was blamed on a range of factors, including the frontloading of tobacco products ahead of the introduction of plain packaging rules.

On the upside, corporation tax receipts, which has benefitted from the relocation of multinational assets here, amounted to nearly €4.7 billion, which was €169 million or 3.8 per cent above profile.

The latest numbers resulted in an exchequer surplus of €2.3 billion for the nine-month period compared with a deficit of €25 million for the same period last year.

The improvement was primarily due to the recent sale of over 28 per cent of the State's shareholding in AIB.

Total spending for the period was just over €33 billion, which was was 0.8 per cent or €270 million below target, but up 5.2 per cent or €1.6 billion in year-on-year terms.

The main overspend was in health, which came in €166 million above profile at €10.68 billion.

“With only three months left in the year, overall tax receipts are in line with forecasts, while expenditure remains within expectations,” Mr Donohoe said.

"This means that we are currently on track to meet our fiscal targets for 2017, providing a stable platform for Budget 2018 and in line with plans to balance the books next year," he said, noting a White Paper setting out the expected expenditure and revenue for the next year would be published later this week.