Sunday 28 December 2014

Exchequer returns: 7.1pc VAT increase a sign of rising consumer confidence

Published 04/03/2014 | 17:34

Figures suggest people are starting to spend again

THE amount of VAT collected so far this year is up 7.1pc on the same period in 2013, signaling people are starting to spend again.

But despite strong jobs figures showing employment increased last year by 61,000, the amount of income tax collected in January and February is roughly the same as the first two months of last year.

The Department of Finance described the income tax data from the latest Exchequer returns as surprising given the strong jobs figures.

A spokesman said officials are examining the issue and suggested it could be as a result of changes to payments systems that have been delaying some returns.

He said a number of income tax receipts for last month were received today, meaning they were too late to be included in the figures for last month.

“There is something going on and we’re not quite sure. But it’s only February and we’ll wait for March,” the spokesman said,

“They’re not as high as they should be. All of the other (economic) indicators are pointing the right way.

“It is surprising to see that income tax is basically flat in February.”

The first Exchequer data for 2014, released last month, was heavily distorted because of delays in receiving tax receipts due to the switch-over to a new European-wide payments system.

The latest Exchequer returns show €2.1bn was brought into the state’s coffers in VAT up to the end of last month. This is up from €1.98bn in the first two months of last year.

But overall, the tax take for the first two months of this year is flat compared with the first two months of 2013.

€5.8bn came in through tax in the first two months of the year, down €4m on the same period last year.

Public spending, at €7.1bn is down €236m or 3.2pc year on year.

The deficit, the gap between how much the state spends and takes in through taxes and other revenue, widened to €1.7bn compared with €0.9bn at the end of February last year.

The Department said this was due to the sale of the Bank of Ireland Contingent Convertible Capital notes for over €1bn in January of last year and a loan to the Social Insurance Fund of €300m last month.

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