Exchequer tax take still ahead of targets

Growth in tax revenue slowed markedly in September, but total receipts remain significantly ahead of Government expectations, figures released yesterday by the Department of Finance reveal.

Exchequer returns for September show the Government's tax take rising to €29.66 billion in the first nine months of the year, 12.2 per cent up on the same period last year.

Lower than expected Government spending contributed to the Government's deficit being €136 million in the period. This compares with a deficit of €1.12 billion in the same period of 2005 and an expected deficit of €2.93 billion for the full year.

Minister for Finance Brian Cowen welcomed the figures as a confirmation of the Government's economic policies.Despite slowing growth, total revenues in the year to September were €1.8 billion ahead of target. However, some €1 billion of the extra revenues were accounted for by overshoots in capital gains tax, capital acquisitions tax and stamp duties.

Compared with expected levels, stamp duty receipts were €687 million ahead of expectations, while capital gains tax and capital acquisitions tax were €250 million and €67 million ahead respectively.

While remaining strong, total revenue growth slowed significantly in the month, cooling to an annualised rate of 8.6 per cent, compared with 15.8 per cent in August. The trend reflects a marked slowdown in growth in taxes related to the property market.

While still strong at 24.6 per cent, growth in capital gains taxes during September was much slower than the 114 per cent growth registered in August. Capital acquisitions tax receipts grew by 51.5 per cent in September, compared to 119.6 per cent in August. Stamp duties slowed more modestly, rising by 33.4 per cent, compared to 36.6 per cent in August.

The lower than expected deficit was helped by discretionary Government spending rising by 9.8 per cent in the year to September, lower than the expected rate of 12.9 per cent.

The department's officials said spending growth was likely to be close to target. "As a general thing, departments tell us they will be there or thereabouts in terms of capital and current spending," assistant secretary Philip Hammel said yesterday.

Mr Hammel said there was no grounds for exuberance in interpreting the figures. "Our job is not to get carried away. Even with these figures, we would expect to be borrowing €700 million at the end of the year, so that's one thing to anchor to," he said.

Mr Cowen said the figures proved that the economy was continuing to perform well internationally. "Overall, tax revenue is ahead of profile and public expenditure is within the targets set for it. These results, combined with recent CSO data, show that the Irish economy continues to perform well ahead of our EU partners."

But speaking at the Small Firms Association (SFA) annual conference, SFA chairman Pat Crotty said the economy's performance was unsustainable.