Officials 'puzzled' at €60m USC tax slump
The Department of Finance has described as "puzzling" the fact that income tax receipts are €282m 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 €60m lower than expected.
This has dragged income tax receipts below where the department had expected them to be at this stage in the year.
It is particularly strange because the number of people out of work has fallen again and now stands at 6pc of the workforce.
Fresh figures this week showed a total of 141,400 people, or 6.4pc of the workforce, had no jobs last month.
Derek Moran, the Department of Finance secretary general, said the weaker-than-expected performance on income tax therefore 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 said.
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, which is €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 yesterday.
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.
Year-on-year, however, tax receipts overall are up €356m, or 3.2pc.
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.