Bumper Christmas sales help boost VAT take by 13pc
BUOYANT Christmas sales sent the VAT collected by the State soaring €225m higher in January than the same period last year.
The first set of Exchequer Returns for 2015 backs up separate data suggesting December saw the strongest Christmas trading season since 2007.
The returns came on the same day that the Central Bank upped its growth forecast for this year due to strengthening domestic demand.
Officials in Dame Street now believe the economy will grow by 3.7pc this year – up 0.3 percentage points since their last forecast a few months ago.
In further good news, the National Treasury Management Agency (NTMA) yesterday raised €4bn after its first 30-year-bond sale, which drew strong demand from international investors despite record low interest rates.
Experts said the Exchequer data suggested the public finances have started off the year in a strong position.
“January is a particularly important month for VAT receipts – reflecting the Christmas trading season through November and December,” said Conall MacCoille of Davy Stockbrokers.
The Exchequer data shows the overall tax take last month was in the order of €4.19bn, up 12.3pc or €460m on January last year.
VAT receipts were €1.97bn in the month, up 12.9pc year-on-year, while income tax receipts were up 4pc or €58m in the month to €1.5bn, compared with the same month last year.
Net spending at €3.9bn in the month was down 5pc or €206m.
Net current spending was down 6.3pc year-on-year to €3.75bn, driven primarily by a year-on-year reduction in social protection spending.
The Central Bank has revised up its growth forecast for this year saying domestic demand is going to make more of a contribution to the recovery than anticipated.
But it warned that risks remained, including the elevated levels of debt.
Chief economist Gabriel Fagan said fiscal consolidation of around 0.5pc would be needed over the coming years to meet an EU target of reaching a balanced budget.
But he suggested this target could be achieved by strong growth, and no further austerity measures.
“It’s true that with buoyant growth in the economy, and ongoing growth, and maybe even stronger growth than we have, without any adverse policies, the headline deficit would come down,” he said.
“But that’s not for us to say, that’s a matter for negotiation between the Government and Brussels,” he added
Specialist bank Investec said the Exchequer data reinforced the story of rising tax revenues linked to the economic recovery.
“Underlying expenditure seems to be a bit more contained than we had feared after the loosening of the purse-strings that was evident in late 2014,” said Investec economist Philip O’Sullivan.
“If the public finances keep this up then the risks to Ireland’s 2015 deficit target will be to the upside.”
Peter Vale of Grant Thornton said the figures for the rest of the year will be equally robust.