Tax take €34m short of targets but still up on 2015
Published 03/03/2016 | 02:30
The tax take for the year so far is €478m larger than it was in the same period in 2015.
But the latest exchequer returns show that the amount of tax taken in for the first two months of this year is actually below target, by €34m.
The Department of Finance said the figure was being "distorted" for two reasons - the fact that February is not a VAT month, in other words VAT was not due from businesses, and that VAT rebates to firms were also issued last month.
Experts dismissed the blip and said the exchequer returns showed another strong growth in tax revenues last month.
Some €7.22bn was collected up to the end of February, compared with €6.7bn in the same period last year.
This means the tax take was 7.1pc larger year-on-year - up from the 5.8pc predicted in October's budget.
A surplus amounting to €310m was also recorded by the exchequer last month, compared with a deficit of €205m in the same period last year.
The department said the improvement is driven by increased tax receipts and reduced expenditure.
So far this year, income tax is 0.4pc above target at €3.13bn, while VAT is 5.2pc below target at €2.4bn, due primarily to VAT repayments. Meanwhile, corporation tax is 0.4pc ahead of target, at €248m, and excise is 0.3pc below target at €946m.
Peter Vale, tax partner at Grant Thornton, said the figures would give comfort to the incoming finance minister.
"Of particular note for the first two months of the year is strong income tax receipts, reflecting the increase in numbers at work," Mr Vale said.
"Excise receipts are also strong, driven mainly by buoyant car sales.
"If the new government can find a way to reduce the income tax burden in an equitable manner over its term in office, this should help the economy continue to recover."
He added that, while politically sensitive, a rebalancing of the books in favour of non income-based taxes, such as property taxes, could help to drive growth.
Davy Stockbrokers said the new government was broadly on track to hit its fiscal target this year, and it said the fall-off in VAT can be clawed back over the year.
"An important point to remember is that the impact of any change in fiscal policy by the next government will not be felt in the numbers until 2017, while EU rules will limit any radical change in course," said Davy analyst, David McNamara.
"With Budget 2016 already passed into law before the government called the election, there is very little chance of a change in course on the 2016 deficit targets, barring the unlikely event of an immediate budget by an incoming government."
On the spending side, current expenditure was €61m below expectations and 5.4pc down on 2015. Meanwhile, health is already spending more than expected, by 0.5pc.