Tax revenue grows 3 per cent in January

Tax revenue in January 2013 stood at €3.77 billion, an increase of €109 million, or 3 per cent, on the same month in 2012, new exchequer figures show. According to the Department of Finance, the year-on-year increase was higher, at 5.6 per cent, when adjusted for once-off factors.

Income tax revenue, the largest single source of tax receipts, grew “strongly”, rising by 10 per cent on January 2012. “This may be reflective of a more benign labour market late last year,” the department said.

Value-added tax, the second-biggest earner for the exchequer, grew by a paltry 0.9 per cent year on year in January. Although the department did not comment on this, the below-inflation increase is likely to reflect continued weakness in consumer spending power.

Exchequer expenditure

On exchequer expenditure, outlays for January 2013 stood at €3,983 million. This represented a year-on-year increase of €157 million, or 4 per cent.

When Government investment spending is excluded, the increase in expenditure between January 2013 and the same month in 2012 stood at 7.2 per cent.

Much of the increase was a result of an 18 per cent increase in spending by the Department of Social Protection. The department attributed the increase to timing factors, with a fifth Thursday, on which benefits payments are made, falling in January this year. The Department of Health has the second-largest budget. In contrast to frequent spending overruns in recent years, it recorded a slight reduction in spending in January compared with the same month last year.

Exchequer debt-servicing costs, which stood at €568 million in January 2013, were down €200 million year-on-year. The decline was due to “a combination of technical and timing factors”, the department said. For the first month of the new year an exchequer surplus of €704 million was recorded. This compares with a deficit of €394 million in January 2012.

Bank of Ireland

“The 2013 exchequer balance benefited from the proceeds of the sale of contingent capital notes in Bank of Ireland,” the department said. The Government announced last month it had sold its entire €1 billion holding of the notes.

It was reported at the time that the notes attracted significant bid interest and were sold at a slight premium, netting the State a profit of €10 million.

However, non-tax revenue came in at €223 million, compared with €345 million last year. Most of the decline was due to a €73 million fall in the income from the bank guarantee due to the reduction in the liabilities covered by the scheme.