Fall in VAT may be due to stock purchases
Department of Finance says DIRT tax hit income tax outcome for 2013
Annette Connolly Principal Officer, Greg Dempsey Chief Finance Operations Officer and John Palmer Principal officer Department of Finance at yesterdays press briefing for the End of December 2013 Exchequer Statement in the Department of Finance office Merrion Street. Photograph: David Sleator/The Irish Times
The shortfall in VAT receipts for 2013 may be due to businesses building up stock and getting VAT rebates during December, the Department of Finance believes.
VAT receipts came in €224 million, or 2.1 per cent below the target for the year, figures released by the department yesterday show. Provisional VAT receipts for December were €122 million, or 57.7 per cent, below target.
The shortfall was among the main reasons for overall tax receipts coming in below expectations during December. Receipts were down €144 million, or 0.4 per cent, as against target, for the year, and €359 million, or 12 per cent, as against target, for December. Receipts had been ahead of target in November.
Final VAT receipt figures reflecting the Christmas period will be released at the end of January and will be included in the official Government deficit figures for 2013 that will be released by the Central Statistics Office later this year.
Income tax receipts for 2013 were also below target despite recent positive data on the employment front. They were down 0.6 per cent – or €102 million – when compared with targets for the year, and down 2.6 per cent – or €35 million – as against target for December.
However officials from the department yesterday said that PAYE and Schedule D tax was up €60 million for the year, while DIRT (which forms part of income tax receipts) was down €162 million.
They believe that the DIRT shortfall is a reflection of the low interest rates banks are paying on deposits, and that the data does in fact reflect the positive news on the jobs front.
On expenditure, the figures show that the Department of Social Protection came in 1.7 per cent below target, while Education and Skills came in 0.1 per cent below target.
These and other shortfalls compensated for the Department of Health coming in 1.4 per cent above target, and Justice and Equality coming in 1 per cent ahead of target. Overall, net voted expenditure was €43 billion, or 0.7 per cent below target.
Overall, the figures released yesterday show total revenue, including non-tax revenue, of €44.7 billion, and total expenditure, including non-voted expenditure, of €56.2 billion, making for an Exchequer deficit of €11.5 billion. That is an improvement of €3.4 billion on the 2012 outturn. The figures show continuing growth in receipts, with income tax being up 3.8 per cent on a year-on-year basis.
Merrion Stockbrokers said it believed the General Government Deficit for 2013 was still likely to be less than 7.3 per cent of Gross Domestic Product.
“In the Budget 2014 publication on October 15th, the department was forecasting a general Government deficit of 7.3 per cent of GDP for 2013. However, we wouldn’t be surprised if the actual out-turn was a touch lower even allowing for today’s figures,” it said in a statement.
Davy said yesterday’s exchequer out-turn meant that the Government should comfortably beat its deficit target of 7.5 per cent of GDP. It expected the final general Government deficit to come in below 7 per cent, and said this would provide a solid base to hit the Government’s 2014 target of 5.1 per cent of GDP. “We expect it to come in at 4.8 per cent.”
Investec said: “the tailwind to the public finances we had expected 2013 to finish with hasn’t proven to be as strong as the gales that have been buffeting Ireland over the past 24 hours.”