Noonan says adjustment will be ‘somewhat less’ than €3.1bn

Minister for Finance Michael Noonan has said the budgetary adjustment will be “somewhat less” than the €3.1 billion recommended by the troika.

However, he said he would only reveal by how much on Budget day.

“We think we can do it somewhat less than the €3.1 billion, but we still have a lot of number crunching to do to see where we come in.”

Mr Noonan was speaking as the exchequer returns for first nine months of the year showed tax revenues were exactly on target, while spending was running below expectations.

The figures, which are expected to be central to the Cabinet’s budgetary deliberations, suggest the Government will realise its main fiscal targets for 2013.

The exchequer deficit at the end of September now stands at €7.1 billion, some €4 billion lower than at the same stage last year.

The figures showed that tax revenues were up 2.9 per cent (or €768 million) on last year.

Income tax, the largest single source of revenue for the exchequer, raised €10.8 billion in the first nine months of the year.

This was €81 million (or 0.7 per cent) below target.

However, the department attributed the slight underperformance to weaker-than-expected receipts from the Deposit Interest Retention Tax (Dirt), linked to lower interest being earned on cash on deposit in banks.

VAT receipts for the period totalled €8.4 billion, which represents a shortfall of €165 million (1.9 per cent) against target, reflecting weak retail sales.

However, the department said VAT receipts had picked up substantially in July and August on account of the good weather and the new seasonal pattern of car sales.

VAT receipts for September were €1.6 billion, which was €80 million or 5.2 per cent ahead of the department’s monthly target.

The shortfall in income tax and VAT was largely offset by a better-than-expected performance in corporation tax, which came in €239 million (10 per cent) ahead of the €2.4 billion target for the nine-month period.

Local Property Tax receipts also boosted Government coffers, netting the exchequer € 200 million so far this year, which was € 80 million or 66.6 per cent ahead of target.

Net voted expenditure was 2.7 per cent below target, at €31.6 billion, at the end of the period, and 4.9 per cent down year-on-year.

The Government is committed to ensuring Budget 2014 delivers a general government deficit of no greater than 5.1 per cent of GDP next year.

“As well as implementing the bailout programme, we have to politically manage it and grow the economy at the same time,” Mr Noonan said.