Tax revenues higher in first quarter
PUBLIC FINANCES:TAX RETURNS were higher than budgeted for in the first quarter of the year, allaying concerns that the increase in VAT would kill off spending.
The Department of Finance published its March exchequer figures yesterday afternoon. They showed that higher tax revenues were partially offset by higher underlying expenditure. Spending on welfare and lump sums to retiring civil servants all ran over budget in the first three months of the year.
The headline rate of spending, however, fell substantially compared to the same period a year ago. This was mainly because the payment of interest on the promissory note (used to bail out banks) was made with a new bond rather than with cash. The exchequer figures are calculated on a pure cash basis, and are of limited value in assessing the overall budgetary position.
The Department of Finance said it had met all exchequer targets for the first quarter of the year as set out under the terms of the EU-IMF bailout. Members of the troika will return to Dublin in less than two weeks to verify the department’s assessment.
Officials also said on the basis of yesterday’s figures they had no reason to revise their overall assessment of 2012 deficit targets.
In the first quarter tax receipts rose by 16.2 per cent year-on-year to reach €8.7 billion. This was €809 million ahead of the target set out in the budget, although half of this was due to technical factors.
In the first three months of the year VAT receipts stood at €3.3 billion, up 5.8 per cent on the same period in 2011.
In March, the first month for which the VAT increase began to flow into the exchequer’s coffers, receipts were more than 10 per cent ahead of projections.
Income taxes, including the universal social charge, generated €3.6 billion in the first quarter of the year, one-tenth higher than anticipated.
Excise taxes were the third largest source of tax revenue in the first quarter, raising just under €1 billion. This was down on the same period last year and below expectations.
On the expenditure side, the Department of Social Protection was the biggest spender in the first quarter with outlays of €3.8 billion. This was more than 15 per cent over budget, and 22 per cent above the same period in 2011.
Health spending, at €3.5 billion, was broadly in line with the Department of Finance’s original budget projections and down marginally on the first quarter of last year.
The Department of Education and Skills was the third biggest spender in the January-March period, paying out €2.3 billion. This was in line with budget projections and last year’s out-turn.
Interest on the growing national debt was sharply up at €1.7 billion in the first quarter.