Tax returns show rate of decline in receipts easing
Tax receipts for the first nine months of the year have fallen by 6.5 per cent compared to last year, but the rate of decline is easing, according the latest exchequer data.
The €22.2 billion in tax collected by the State in the year to September was €1.5 billion short of the €23.7 billion amassed during the same period of 2009.
However, the figure was only €42 million - or 0.02 per cent - below the Government’s target, an improvement on the shortfall witnessed in the preceding months and the strongest indication yet that the Government’s finances were stabilising.
The data showed income tax receipts were some €337 million or 4.4 per cent behind target for the period at €7.36 billion, reflecting the continuing weaknesses in the labour market.
This was partially offset by a better-than-expected performance in corporation tax which came in at €2.19 billion, €235 million or 12 per cent ahead of forecast.
Overall, the figures showed the exchequer deficit for the first nine months of the year stood at €13.4 billion, compared to a deficit of €20.1 billion, recorded at the end of September last year.
Minister for Finance Brian Lenihan said this evening the figures showed the public finances were “stabilising” due to decisions taken by the Government.
He said the year-on-year rate of decline in tax revenues was continuing to ease, and overall taxes were now likely to end the year in line with the Government’s budgetary target of €31 billion, 6 per cent down on last year.
The poor level of income tax receipts reflected “labour market developments,” Mr Lenihan said. However, he described the performance of corporation tax as "particularly encouraging".
Ulster Bank's economists Simon Barry and Lynsey Clemenger said the figures indicated there had been "a welcome shift towards an improved dynamic in tax receipts in recent months".
In the three months to the end of September, the data showed tax revenues were 2 per cent down on the same period in 2009. However, compared to the second quarter of 2010, tax revenues were up 7.6 per cent.
Monthly tax revenues hit €3.3 billion in September, their highest levels since November 2009.
On the expenditure side, total exchequer spending at the end of September was €33.2 billion, nearly €1.6 billion or 4.5 per cent down on the same period last year.
Capital expenditure was €2.9 billion, some €1.4 billion or 32 per cent down on last year and €942 million or 24.1 per cent behind target.
“While this underspend should be substantially corrected in the last quarter of the year, it is not unreasonable to expect savings in this area at year-end,” Mr Lenihan said.
Current expenditure was down €156 million or 0.5 per cent on the same period last year at €30.2 billion, despite an anticipated increase in spending by the Department of Social Protection due to the rapid increase in joblessness.