Donohoe insists Government will hit budgetary targets
Minister says public finances on track despite tax projection shortfall
Minister for Finance Paschal Donohoe says the Government is on course to meet budgetary targets for the year. File photograph: Nick Bradshaw
Minister for Finance Paschal Donohoe insists the Government is on course to meet its budgetary targets for the year - despite the latest exchequer returns showing tax receipts continuing to run behind target.
The figures, the final exchequer returns published by the Department of Finance ahead of next Tuesday’s budget, showed the Government’s tax take for the first nine months of the year was just over €35 billion, some €212 million less than expected.
The gap between actual and expected tax receipts was driven in the main by an underperformance in income tax, the Government’s largest tax heading, which came in €188 million below profile, at €13.6 billion.
But Department of Finance officials said the projection shortfall would likely unwind before the end of the year on foot of more buoyant income tax receipts from the self-employed in November, which are expected to better reflect current employment growth.
Commenting on the numbers, the Minister said: “With only three months left in the year, overall tax receipts are in line with forecasts, while expenditure remains within expectations.
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“This means that we are currently on track to meet our fiscal targets for 2017, providing a stable platform for Budget 2018 and in line with plans to balance the books next year,” he said.
The latest exchequer numbers show VAT came in just below target at €11 billion for the first time this year. On a monthly basis, the sales tax was also 6.2 per cent, or €132 million, below profile.
Figures show the Government is continuing to benefit from bumper corporation tax receipts, at nearly €4.7 billion
The department blamed the underperformance on greater-than-expected repayments, dismissing suggestions it was linked to a pick-up in cross-Border shopping triggered by the recent weakness in sterling.
Excise duty also came in €116 million, or 2.7 per cent, behind target at €4.2 billion, which was blamed on a range of factors, including the frontloading of tobacco products ahead of the introduction of plain packaging rules.
The figures show the Government is continuing to benefit from bumper corporation tax receipts, however. These came in at nearly €4.7 billion, €169 million, or 3.8 per cent, above profile.
The latest numbers resulted in an exchequer surplus of €2.3 billion for the nine-month period compared with a deficit of €25 million for the same period last year. The improvement was due primarily to the recent sale of over 28 per cent of the State’s shareholding in AIB.
Total spending for the period was just over €33 billion, which was was 0.8 per cent or €270 million below target, but up 5.2 per cent or €1.6 billion in year-on-year terms.
The main overspend was in health, which came in €166 million above profile at €10.68 billion.
Department officials ruled out the likelihood of any surprise hike in spending via the supplementary estimates, a mechanism used by the Government previously to deal with various departmental overspends.