Key tax yields below target ahead of Budget

The Government’s yield from key taxes dropped below target last month, but cumulative receipts for the year to date remain ahead of official forecasts.

As preparations advance for the Budget in a fortnight, Exchequer returns released this afternoon show that the Government collected less income tax last month and less corporation tax than it expected.

The figures are likely to strengthen the hand of figures in Goverment who are arguing against a tax give-away when Minister for Finance Michael Noonan unveils Budget 2015 on October 14th.

Although health spending overruns continue, the returns point also to increased consumer spending with Vat and excise duties ahead of target.

Total tax revenue in the first nine months of the year came in at €28.87 billion, up €1.99 billion or 7.4 per cent on the same period in 2014. This was €703 million or 2.5 per cent ahead of the target set by the Department of Finance.

However, the Department notes that tax receipts during September were €268 million or 6.3 per cent below profile.

As much as €220 million of the shortfall was attributed to delayed receipts from the pension fund levy due to the introduction of the single European payments area regulation. The Department expects to receive this money early this month.

Income tax for the first nine months come in at €11.77 billion, up €956 million or 8.8 per cent on the same period in 2014 and €136 million or 1.2 per cent ahead of target. Still, receipts of €1.18 billion in September were €37 million or 3 per cent behind the target set for the month.

Similarly, the figures show that corporation tax returns reached €2.71 billion in the first nine months and were running €77 million or 2.9 per cent higher than in 2013 and €108 million or 4.1 per cent ahead of target. However, monthly corporate tax receipts of €327 million were €78 million or 19.3 per cent below target .

The figures show that VAT receipts for the year to date stood at €8.96 million, up €280 million or 3.2 per cent on the official target and €550 million or 6.5 per cent higher than in 2013. “This is reflective of improved consumer confidence as evidenced in recent retail sales figures,” the Department said .

Excise duties reached €3.56 billion in the first nine months, €217 million or 6.5 per cent ahead of 2013 and ahead of target by €197 million or 5.8 per cent. Excise receipts in September were ahead of target by €41 million or 11.5 per cent.

Cumulative stamp duties, including the pension levy due one week ago, stand at €1.03 billion in the first nine months. This is down €62 million or 5.6 per cent on 2013 and €41 million or 3.8 per cent below target .The duties received in September stood at €387 million, a net €210 million below target.

Property tax receipts of €385 million in the first nine months were €15 million or 3.8 per cent below profile.

Non-tax revenues stood at €2.2 billion until the end of September, down €73 million or 3.2 per cent on 2013. This was attributed to lower fees from the State guarantee eligible bank liabilities due to its gradual closure, although the reduction was “somewhat offset” by increased dividends and Central Bank income.

Capital receipts rose €1.23 billion or 32 per cent year-on-year to €5.05 billion in the first nine months.

“The main reason for the increase was the repayment of Exchequer loans given to the Social Insurance Fund which were somewhat offset by the non-recurrence of the sale of the Bank of Ireland CoCos and the sale of Irish Life in 2013,” said the Department.

“The loan repayments to the Exchequer are cash flow related and have no impact on a general government basis on which achievement against fiscal targets are based on.”

Overall net voted expenditure to end-September reached €30.98 billion, down €630 million or 2 per cent on 2013 and €14 million above profile.

Net current expenditure reached €29.46 billion, 0.5 per cent or €139 million above profile. “This is driven by overspends in the Health Group which is €251 million (2.9 per cent over profile. The Health Group overspend is partially offset by underspends in most other Departments,” said the Department.

Net voted capital expenditure to end-September was €1.52 billion, €125 million or 7.6 per cent below profile.

Non-voted capital expenditure reached €3.68 billion to end-September.

Non-voted current expenditure, excluding debt servicing costs, stood at €1.81 billion to end September compared with €2.44 billion in 2013.

“The primary reason for the decrease is due to the significant reduction in bank guarantee payments associated with the liquidation of IBRC, which is partially offset by the transfer of local property tax receipts to the Local Government Fund,” said the Department.

Total Exchequer debt serving costs thus far this year reached €5.61 billion, up €100 million on 2013.

“ Interest expenditure - the largest component of debt servicing - was 7.3 per cent below the Budget 2014 consistent profile at end-September 2014,” said the Department.

“This is primarily due to the December 2013 bond-buy back which resulted in lower interest expenditure in the early part of 2014, lower than expected costs from bond issuance so far this year and a favourable rate reset on the floating rate bonds post-Budget last December.”