Exchequer remains on target for 2012 tax take

DESPITE A disappointing set of tax receipts for October the exchequer is still considered to be on track to meet its targets for 2012.

The latest returns, with corporation and income taxes declining in the month, published by the Department of Finance, reveal that tax revenues of €2.2 billion were €289 million behind expectations.

Peter Vale, a tax partner at Grant Thornton, described the results as “probably the weakest set of figures so far this year”.

While the month is typically quiet, Mr Vale noted that if the trend continues it will have significant consequences for the forthcoming budget.

Chief economist with NCB Stockbrokers Philip O’Sullivan said November will be a “critical” month for tax receipts, but added that the exchequer remains on “track to meet its targets for 2012”.

When examined on a 10 months to October basis, tax revenues are still exceeding expectations at €28.4 billion, 6.3 per cent (4.3 per cent on an adjusted basis) ahead of the same period last year and €96 million (0.3 per cent) ahead of forecasts.

Income tax – the largest source of tax revenue – was up by 11.3 per cent on the previous year, at €11.7 billion or by 8.6 per cent on an adjusted basis. This was €69 million (0.6 per cent) ahead of forecasts.

However, returns showed a decline last month. But with November a critical month for self-employed returns, € 2.5 billion is expected to be collected.

Similarly, corporation tax receipts also showed a decline last month, recording a shortfall of €225 million against the anticipated tax take.

This was expected, however, with close to €1.2 billion, or 30 per cent of the annual target, expected to be collected in November. And over the 10-month period to the end of October, corporation tax revenues are ahead of expectations by € 26 million (1 per cent), at €2.7 billion.

Value added tax was again ahead of expectations last month, up by €286 million on 2011 or 3.5 per cent. VAT is € 106 million (1.3 per cent) ahead of targets.

On the spending side, total net voted expenditure, at €36.7 billion, exceeded the target by €88 million (0.2 per cent).

However, in year-on-year terms, it is 0.8 per cent, or €311 million lower than 2011.

Overspends were recorded in the Department of Social Protection (caused in large part by a PRSI shortfall of €289 million) and the Health Vote Group.

A €2.9 billion deficit was recorded last month and was largely due to a €1.3 billion debt interest payment and a contribution of €0.5 billion to the European Stability Mechanism (ESM).

Overall, the exchequer deficit stood at €14.1 billion at the end of October, down from €22.2 billion at the same point in 2011.

This was largely due to the settlement of the IBRC promissory note with a Government bond and also that the banking recapitalisation of July 2011 was not repeated.