Tax revenues beat forecasts despite economic downgrade
Published 05/05/2011 | 05:00
TAX revenues last month came in better than expected -- just days after the Department of Finance downgraded its estimates for the economy.
One analyst said the Government might meet its original targets, based on 1.7pc growth this year, and the figures showed income tax was almost 2pc higher than had been affected.
The figure was boosted by early payments of DIRT tax on savings but officials said the underlying figure was more than €60m above expectations at the time of the last Budget.
This means they would be even further ahead of a target based on the downgrade to 0.7pc growth in last week's analysis from Finance.
"Overall, the Exchequer deficit was €9.9bn in the four months to April, up from €7bn in the corresponding period of 2010. But this increase largely relates to the €3bn payment of promissory notes (to provide capital for Anglo and Irish Nationwide)," said Conall Mac Coille, analyst at Davy Stockbrokers.
"Today's release suggests that tax revenues are more likely to meet the targets set out in Budget 2011."
The department's stability update document increased the estimate for this year's Exchequer borrowing by €500m to €18.2bn. Finance Minister Michael Noonan told the Dail it was encouraging that the Exchequer returns showed in broad terms that spending and tax outturns to the end of April were "in line with expectations".
He stuck to the new forecast of 0.7pc growth in 2011, but did not rule out that it could be higher.
The figures show that total tax receipts of €9.6bn in the first four months of the year were 1pc ahead of the target set in last December's Budget.
VAT revenues of €3.4bn were just over 3pc short of the original target.
Corporation tax on company profits was again the star performer, being a third higher than expected.
However, most payments come late in the year and total revenues from this tax in the four months were less than €300m.
The rise in income taxes and the new universal social charge meant taxpayers forked out 20pc more -- €700m -- in the first four months of the year than they did in 2010. Mr Noonan warned that there would still be a need for further budget cutbacks in the coming years to close the gap between spending and tax revenue.
"We cannot continue to spend more than we earn. This is simply not sustainable," he said.