Exchequer beats income target after surge in corporation tax
A SURGE in corporation tax was among the reasons the State took in more revenue than planned in the first six months of the year.
Spending was also behind schedule, according to the latest government figures.
The Exchequer returns for June show income tax was broadly in line with expectations, while the corporation tax take is well ahead of what was predicted so far this year.
Even so, VAT receipts were lower than planned, suggesting consumers remain nervous and reluctant to spend.
The returns also show €126m has been brought in through the property tax, with the Department of Finance claiming a compliance rate of about 90pc. It expects to meet its targets for the end of the year.
The figures paint a mixed bag about the state of the economy. Excise duties are down, implying the amount of money being spent on cigarettes and alcohol was less than expected, but there is increased house buying and more shares being traded on the Irish Stock Exchange.
Corporation tax was also up, coming in €250m more than expected. Importantly, corporation tax in June – the second most important month of the year for such returns – was €100m ahead of forecasts.
Overall, the Exchequer collected about €17.6bn in taxes in the first six months – €166m ahead of target.
Finance Minister Michael Noonan described the figures as a solid performance.
"The performance of corporation tax is impressive and the performance of income tax, the largest source of revenue, is reflective of the gradual improvement in employment levels evident in recent months," he said.
Some €21bn was spent by government departments so far this year, compared to a budgeted €21.5bn. All departments spent less than expected, except for Arts, Heritage and the Gaeltacht which was just €1m over.
About €20bn went on current expenditure. Capital spending was 12.9pc less than expected while current was down 1.9pc.
Industry experts were broadly positive on the returns, but warned that much could change be the end of the year.
Peter Vale, a tax expert at the accountants Grant Thornton, said the figures showed that the Government would have limited scope to cut taxes or increase spending in October's Budget.
Key figures from the first half of the year show:
* Total tax revenue of about €17.6bn – up 1pc on expectations.
* €7.3bn was taken in from income tax – 0.2pc lower than thought.
* €5.2bn brought in from VAT – 2.9pc lower.
* Corporation tax was at €2.1bn – up 13.8pc.
* Excise was at €2.2bn – down 2.9pc.
* Stamps brought in €445m – up 6.5pc.
* Exchequer deficit was €6.6bn – €2.8bn lower than the same period last year.
Davy Stockbrokers' chief economist Conall MacCoille said the Government looked to be on track to meet its target of cutting the deficit to 7.4pc of the value of the economy by the end of the year.