Sunday 17 December 2017

Tax take for first nine months of year €1.7bn bigger than expected

Michael Noonan
Michael Noonan

Colm Kelpie and Daniel McConnell

The tax take for the first nine months of the year is €1.74bn bigger than expected, the latest Exchequer Returns show, driven by an extremely strong performance in corporation tax.

With just two weeks to go until the Budget, the total tax take so far this year is €31.6bn, -5.8pc stronger than profile.

Income tax is 1pc or €118m better than expected for the year to date, while VAT is 2.3pc or €222m stronger.

Corporation tax is a massive 44.2pc, or €1.21bn, ahead of target for the year so far.

On a monthly basis, corporation tax receipts have helped push the overall tax take ahead of target, but income tax is €27m below target, while VAT is €115m over. Monthly data, however, can be volatile.

Finance Minister Michael Noonan said there was a strong performance across all tax heads.

Speaking in Dublin, Mr Noonan said that at the end of September, at €31.6bn, tax revenues were  5.8pc  ahead of target.

"In terms of year-on-year performance, tax revenues are actually up €2.5 billion or 8.7pc," the Department of Finance has said.

As a result, Mr Noonan said the Budget deficit will be 2.2pc this year and around 1.5pc next year, way better than previously expected.

Mr Noonan also said the National Debt will fall below important milestone of 100pc of GDP this year.

Speaking to reporters, Mr Noonan said the country is in a "very good position"

He added: "Boom and bust policies have wrecked the economy three times in my political life and we wont do it again."

Both ministers said that despite the better than expected tax revenues, the additional spending in the Budget will not go beyond €1.5bn, with the National Debt being reduced.

"What we are not spending we are putting off the debt," Mr Noonan said.

Mr Noonan gave little away in terms of his Budget plans but did say the Government will continue   reducing personal taxes, to help young women go back to work, and bring emigrants home.

Mr Noonan was asked about his view as to when the General Election will take place, and he said that there are two possible windows as to when it will happen.

"There are two windows as to when there will an election, now and Christmas and after Christmas, the Taoiseach will decide," he said.

On the spending side, Mr Howlin said most Government departments are on profile, with the exception of health and foreign affaiirs, but this was because of additional money being allocated for the migrant crisis in the Mediterranean.

Mr Howlin hailed the figures as significant in the context of where the country was when this Government came to office.

"We would have given our right arm for a growth rate of 6.2pc a couple of years ago," he said.

Mr Howlin said there was a  €325m over run in Health by end of September and it will get a supplementary estimate by year end.

There will also be a €100m supplementary estimate for Transport to by new buses, and a €50m add on for Eduction.

The underlying Exchequer deficit in 2015 will be €2.1bn compared to an underlying deficit of  €6.1bn in 2014, an improvement of €4.0bn.

Meanwhile, the Central Bank has sharply increased its growth forecasts, but continues to warn that the Budget priority should be to pay down debt and improve the public finances.

It said the economy is showing evidence of “exceptionally strong growth”, it says in its latest quarterly commentary, increasing its GDP growth forecast for this year to 5.8 per cent, compared to 4.1pc previously.

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