2011 tax take up €2.3bn but below Government targets
TAX REVENUES for 2011 came in at €34bn or €2.3bn higher than the previous year but the figure is below the Government target, exchequer returns for end December show.
The tax take was €873m off the original budget 2011 aim but the figures exclude €261m in corporation tax receipts which have already been received but have not been included in the figures.
According to the figures, the largest shortfalls against target were corporation tax, VAT and income tax at €500m, €489m and €327m respectively.
The figures also show the Government has met deadlines set by the EU/IMF/ECB troika in relation to the deficit mainly through spending cuts.
According to the returns, the Exchequer deficit was €24.9bn compared with €18.7bn in 2010 with the €6.2m increase related to bank recapitalisations.
The year-on-year increase in tax revenues was due mainly to a 22pc increase in income tax growth through the introduction of the Universal Service Charge as well as a 45pc hike in stamp duty revenues resulting from the levy on pension funds.
According to the Government, the figures “enhance the credibility and robustness of our 2012 tax forecasts” but they also reflect an ongoing weakness in key taxation categories like income tax and VAT, which did not grow as much as had been expected, against the backdrop of a weak domestic economy and fears of a return to recession at the end of last year.
On the spending side, the net voted expenditure was €45.7bn or €725m down year-on-year.
“We enter 2012 with our finances under control and this further underpins the credibility of our 2012 budgetary forecasts,” said Finance Minister Michael Noonan.
“The Exchequer deficit in 2011 was some €2.75bn lower than it was 2010, when the impact of banking related expenditure is excluded.
“This shows that we are making progress in returning our public finances to a more sustainable path.”
But economists warned the Government will have a tough time ahead.
“At this stage it looks a difficult task given the current uncertain global/economic backdrop with the risks to growth projections clearly to the downside, and even allowing for the bonus of the corporation tax receipts in January,” said Alan McQuaid, chief economist at Bloxham Stockbrokers.
“That said, things could change quite quickly and we certainly wouldn’t be advocating the Government implementing more fiscal austerity this year if the deficit targets set out for 2012 don’t look like being achieved.
“Further austerity than is necessary would in our view only do more damage to the economy and hamper recovery/growth prospects.