Tax take more than half a billion Euro ahead of expectations in August
The tax take was more than half a billion euro healthier than expected last month, with large gains recorded in income tax and VAT.
The taxman collected about €1.4bn more than forecast so far this year, meaning the take for the entire year could end up close to €2bn healthier than thought in last October’s Budget.
Exchequer Returns for August, the last before the intense horse trading that will proceed next month’s Budget, show that €27.34bn has been collected in the year to date – 5.4pc higher than expected – with all categories doing better than predicted.
Income tax, the single biggest source of taxation, at €11.22bn, was €146m, or 1.3pc better than targeted.
VAT, at €7.96bn, was €107m or 1.4pc healthier.
This reflects the recovering labour market as well as improving consumer demand, as unemployment drops, confidence among consumers rises and households spend more.
In April’s Spring Economic Statement, it was predicted that the tax take this year could be around €1bn higher than anticipated in Budget 2015.
But now, with a number of experts forecasting that the economy could grow by more than 5pc this year and the jobless rate will fall further in the coming months, the Department of Finance is expecting the tax take could be closer to €2bn higher by the end of the year than expected.
The data confirms the pattern drawn by previous Exchequer releases, and comes on the back of a number of positive economic reports.
In theory, the extra cash could give the Government even more wriggle room to play around with in Budget 2016 – the last before the General Election – but also make it politically more difficult to dampen expectations.
Taoiseach Enda Kenny has pledged to be prudent and to not go beyond the €1.2bn-€1.5bn expansion promised in the Spring statement.
Finance Minister Michael Noonan said the data showed the public finances are in a strong position ahead of Budget 2016.
“Overall, the tax performance for the first eight months of 2015 is ahead of expectations, with a very strong performance across all the major tax heads,” he said.
“The tax take is ahead of profile and is up by 10pc or just under €2.5bn year-on-year. This is driven primarily by improvements in the underlying strength of the economy, job creation and the positive impact this is having on consumers, and businesses.”
Mr Noonan said the state was well on track to meet its targets this year.