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Saturday 27 May 2017

Taxes 'meet bailout target'

But State coffers fall back levels not seen since 2002

Fionnan Sheahan Political Editor

FINANCE Minister Brian Lenihan's officials wrote to the EU and IMF yesterday to tell them the deficit in the country's finances has met the first bailout target.

The Department of Finance sent an email to the offices of EU Commissioner Olli Rehn, EU bailout fund chief Klaus Regling and the IMF's Ajai Chopra to tell them the deficit meets the "performance criteria target" of the rescue package.

But the tax take in 2010 was back to a level not seen since 2002 at €31.75bn.

A boom in corporation tax receipts -- the tax on company profits -- saw tax revenues finish €700m ahead of the figure predicted by the Government.

Corporation tax receipts were nearly a quarter higher than predicted by the department.

All told, the Exchequer deficit for the year of €18.7bn was in line with the Budget 2010 target.

The tax take for 2010 was nearly €1.3bn below the 2009 figure. Income taxes fell short of the amount forecast, despite a late surge in December which contributed €220m more in taxes than was anticipated on Budget day.

VAT receipts were almost on target and it is too early to see if the snow and cold weather in December had an impact on shops and restaurants -- or if the January sales helped to make up the lost ground.

The corporation tax receipts were boosted by the export-driven recovery of the economy.

On the spending side, current expenditure was €231m above what was budgeted due to shortfalls in the PRSI and health levy, resulting in overspends in health and social welfare.

Capital spending was €82m under budget, but the significant shortfall identified at the end of September, particularly in education, was made up by the end of the year.

Suffering

But the slightly lower income tax take shows the impact of unemployment.

Opposition parties said the end of 2010 Exchequer returns were "a tale of two Irelands" with exports booming but households suffering.

Fine Gael finance spokesman Michael Noonan said that the multinational sector was enjoying modest growth but the domestic economy has stalled completely.

"Tax receipts seem to be stabilising, but there is no sign of any broad economic growth or recovery, as reflected in the desperate state of the jobs market and the return of mass emigration," he said.

Labour Party finance spokeswoman Joan Burton said some solace could be found in the fact the deficit had fallen and some monthly tax revenue targets were met towards the end of the year. But she said the public finances had stabilised at a very weak level.

"We may have finally hit bottom, but it's still a long way back if we are to get the economy out of the hole into which Fianna Fail has dug us," he said.

Mr Lenihan said the 2010 figures confirmed his analysis that the public finances had "stabilised".

"These figures, in tandem with the encouraging economic data for the third quarter of 2010, mean we enter 2011 on the road to economic recovery and that the targets set in Budget 2011 are achievable," he said.

Irish Independent

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