Tax take is €1.5bn up on last year but VAT lagging
Published 03/06/2016 | 02:30
The tax take so far this year is running €1.5bn ahead of the same period last year, and the State finances have improved once one-offs like the sale of bank shares are excluded.
The figures are boosted by a surge in corporation tax, which amounted to €1.669bn at the end of May. That was up 9.3pc from last year and 40.9pc above profile, or forecasts.
Income tax is bang on target, but VAT is below expectations for the year so far.
Excluding factors such as the sale of shares in Permanent TSB early last year, the exchequer shows an underlying year-on-year improvement of €1.376bn, according to the latest official Exchequer Returns.
When all factors are included, it recorded a deficit of €125m in the five months to the end of May, compared to a surplus of €641m in the same period last year.
But the 2015 figures were distorted by the effect of the €2.14bn received from the sale of PTSB shares and bonds, and a transfer from the national pension reserve fund.
Income tax receipts of €7.44bn are on profile and up €399m (5.7pc) from last year.
But VAT receipts are €121m, which is below target for the year so far.
Overall, the tax take for the year to date is €774m, or 4.3pc, ahead of expectations.
Experts said the exchequer data shows that Irish public finances continue to outperform expectations
"Tax revenues were 4.3pc ahead of target while spending discipline is being maintained in all departments except Health," said Davy economist David McNamara.
"Nonetheless, overall general government-related spending is still 1.1pc below expectations. This leaves the deficit at €961m for the year to date, compared to an expected €2.2bn.
"While still early in the year, the exchequer numbers suggest that the government's end-year deficit forecast of 1.1pc will prove too conservative."
Peter Vale, of Grant Thornton, said the data showcased another strong set of figures.
"The main focus was on the VAT figure, as VAT receipts for the year to date were lagging behind target," he said.
"The VAT receipts for May show a return to positive figures, with the numbers both ahead of target and last year.
"Interestingly, VAT receipts have lagged behind the growth in other tax heads since 2012," he said.
"Given the strong labour market, it is perhaps surprising that we haven't seen a corresponding surge in VAT receipts.
"It suggests that the effects of the recession haven't quite been forgotten and that consumers are taking a more cautious approach to the improving economic climate."
Mr Vale also suggested that a greater proportion of disposable income is being used to pay down debt, or is in savings.
Total gross current spending was 1.1pc, or €230m below target, and capital expenditure was €33m, or 3.4pc below target.