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Saturday 23 August 2014

Higher tax take raises hopes for cuts in autumn

Tom Molloy

Published 03/05/2014 | 02:30

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Michael Noonan, T.D., Minister for Finance

HOPES among hard-pressed families that Finance Minister Michael Noonan will cut taxes in October have been boosted after the tax take surged in the first four months of the year.

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The latest Exchequer figures show the State is running a deficit of €4.8bn compared with €6.1bn in the same period last year. That's an improvement, but we are still borrowing €1.2bn every month to tide us over.

The deficit fell as people paid more tax, spending fell and the liquidation of the former Anglo Irish Bank saved money.

New figures published yesterday show the Revenue Commissioners collected €11.6bn in taxes in the first four months of the year, a 5.6pc increase on the same period last year and 2pc ahead of target. Income tax totalled €5.4bn or 7.2pc more than the same period last year, as more people got jobs.

VAT receipts for the year to date totalled €3.7bn, or 5.1pc more than this time last year.

While the figures were strong, analysts said April's tax take was weaker than expected in many areas.

"Income tax receipts remain strong, verifying the positive employment data that we've seen in recent months," said Peter Vale, a tax partner at Grant Thornton.

"The question is how much scope the minister will have for tax cuts in October."

The latest Exchequer figures came on the same day that the first IMF/ECB review mission since the bailout ended. Officials from the International Monetary Fund and the European Central Bank came to Dublin for meetings with many official organisations.

The troika official hailed the "beginning" of a recovery but warned Mr Noonan (below) to stick to his Budget plans.

"Retail sales are rising and residential property market recovery is spreading beyond Dublin," it said in a report.

Turning to the Budget and talk of tax cuts, the troika officials said the gap between income and spending must continue to fall in line with targets and the government should aim not to borrow anything in the medium term.

Despite having to introduce spending cuts and tax increases totalling €2bn, Mr Noonan said on Thursday that he wants to look closely at income tax codes to make sure that they do not prevent job creation.

The Dail committee on finance, public expenditure and reform said it wants to hear from the public and organisations about what Mr Noonan should do in Budget 2015.

Submissions should be sent to the Clerk to the Joint Committee before June 16 and can be made by email to fincom@oireachtas.ie.

Irish Independent

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