Tax revenues increase by 1.9 %

Total tax receipts in January increased by 1

Total tax receipts in January increased by 1.9 per cent compared to the same month last year, or by €57 million, according to the first set of Exchequer figures for 2011.

The January figures continue a trend in evidence since the second half of 2010 which has seen year on year growth in tax revenues.

This comes after an extended period in which revenues collapsed, opening up an historically large deficit in the public finances.

Although monthly tax revenues can be volatile, they are among the most timely indicators of the performance of the wider economy. The figures suggest that the economy continues to stabilise.

The growth in total tax revenue masks considerable variation across the range of taxes. In January value added tax (VAT) revenue grew by 3.6 per cent on the same month last year.

By contrast, income tax receipts, which are typically the largest source of revenue, fell by 6.5 per cent year on year. This happened despite large increase in income tax rates in the December budget.

A Department of Finance spokesman said that the effect of higher rates was not yet to be seen in revenues owing to time lags. Most of the monies that flow into the State's coffers in any given month relate to taxes paid by individuals and businesses in the previous month.

Excise duties, which usually provide one of the largest revenue flows for the Government, rose by over 8 per cent year on year.

Overall exchequer spending in January was down year on year owing in part to an accounting change which saw much of the cost of servicing the national debt being funded from non-exchequer sources.

The Government announced at the time of the budget that €600 million of the estimated ¤5 billion in debt servicing costs would be paid from the Capital Services Redemption Account rather than from the exchequer.

Much reduced capital outlays also contributed to the overall decline. At €214 million, capital spending was less than half the figure recorded in January 2010.

Current exchequer spending in January rose slightly. The Department of Finance said that the increase was "due primarily to the reclassification of health levy receipts which increases net voted current expenditure."

Of the 15 Government departments, 12 recorded declines in expenditure in January compared to the same month in 2010.

The three Departments which spent more in January this year than last were: Health and Children; Community Rural and Gaeltacht Affairs; and Finance.

With spending down and revenues up in January compared to a year earlier, the exchequer deficit narrowed considerably. In January 2010 it stood at €780. This year in the first month of the year it had fallen to €480.