Department of Finance chief describes income tax receipts coming in below target as 'puzzling'
The top official at the Department of Finance has described as “puzzling” the fact that income tax receipts are €282 million below target for the first three months of the year.
PAYE and PRSI receipts are performing strongly, reflecting the improving jobs picture, but the amount of money collected via the Universal Social Charge (USC) is €60 million lower than expected.
This has helped drag income tax receipts below where the Department had expected them to be at this stage in the year.
Derek Moran, the Department of Finance secretary general, said the weaker than expected performance needs to be monitored, but added it was too early to be worried.
“The softer performance of income tax in particular in the first quarter is something that we need to be alive to,” he told TDs and Senators.
Mr Moran suggested it was too early in the year to place any great emphasis on the data, which he said can be volatile at this stage.
“The figures, I wouldn’t call them worrying, they are puzzling,” he added.
While USC contributed to the below par performance, exit taxes on life assurance policies coming in below target and lower than expected DIRT receipts were also blamed for the income tax shortfall against target.
The tax take overall for the first three months of the year totalled €11.49bn, €282m or 2.4pc below target.
The USC shortfall against profile, therefore, is only a fraction of the overall tax take.
Income tax is almost 4pc behind target, corporation tax is a massive 25.3pc lower than expected, and excise is 6.6pc behind.
VAT receipts, however, are €151m or 3.4pc above target.
Mr Moran said the fact that corporation tax receipts are so far off target is “less of a puzzle”.
“The lumpy nature of corporation tax means that there’s a variation from month to month, particularly the lower target months. I’d be far more concerned if we go through May and June, which are big payment months, and we see big shortfalls,” Mr Moran told the Oireachtas Budgetary Oversight Committee.
The secretary general also said the concentration of corporation tax receipts, in that about 36/37pc of receipts relate to about 10 companies, is a risk.
On Brexit, the department’s chief economist John McCarthy said there was nothing to suggest that the economy had slowed in the first three months of the year.
“I don’t think as yet that we’re seeing a Brexit impact in terms of macro numbers or on the fiscal side,” Mr McCarthy said.