Boost as €14.4bn tax take and first May surplus since 2008
TAX revenues hit €14.4bn in the first five months of the year, an increase of €1.6bn compared with the same period of 2011, according to the latest Exchequer Returns.
And the Exchequer recorded a surplus in the month of May of just over €600m for the first time since the same period in 2008 although the month of November generally records a surplus every year given the concentration of tax revenue received.
The May boost is considered a bellwether for the rest of the year putting the Government on course to meet targets set out as part of the EU/IMF/ECB bailout loan terms.
The tax take was €386m ahead of the end-May expectations with VAT and corporation tax the main contributors.
All of the key taxes were ahead of profile including income and VAT.
“With five months of the year passed, we remain satisfied that our tax revenue target for the year as a whole remains achievable, particularly as the performance in May (which is one of the largest monthly collection profiles) held up well,” said a spokesperson for Finance Minister Michael Noonan.
According to the figures, adjusted debt servicing costs were up around €750m year-on-year at end-May.
And overspending continued in areas like health and social welfare with net current spending at €17.9bn - just over 2pc ahead of that budgeted.
However, the overall figures will be a boon to the Government which is under pressure to bring the country’s finances under control against the backdrop of the extent of the bank debt.
Earlier the Government appeared to knock back Taoiseach Enda Kenny’s plans for a reduction in our crippling bank debt on the back of the Yes vote in the Fiscal Treaty Referendum..
A special deal for Ireland on the €60bn bank-plus debt being paid by taxpayers, would send the wrong signal, a spokesman for one of Angela Merkel’s most senior ministers said.
“We see no need for movement at the moment,” said Martin Kotthaus, spokesman for Germany’s finance minister Wolfgang Schauble.
Reopening Ireland’s bank rescue would be a ‘negative signal’, he added.
Germany, as the largest contributor to the ESM, has a veto over the use of funds and can ensure that Ireland’s onerous bailout terms remain in place.
Justice Minister Alan Shatter told RTE Radio today that while “different individuals make comments across Europe” the talks on the debt issue were ongoing and will continue to be on the agenda for weeks to come.
Mr Shatter denied the remarks from Germany were a rebuff to Ireland and said that the Government had objectives to ensure that all that was necessary and possible in the interests of the country, was being done.
Mr Kenny was in touch with German chancellor, Mrs Merkel last Friday and it has been reported that he will go back to EU leaders with proposals to reduce bank debt that were rejected in the past year.
The Taoiseach also said today that a deal is not imminent.
The Coalition is hoping to piggy-back on a possible rescue deal in Spain, where the banking crisis is escalating.
A bank-debt deal would reduce the burden of the €64bn already pumped into the banking system, especially the €30bn of loans for Anglo Irish Bank.
Taking out the €21bn provided from the National Pension Reserve Fund, the remaining €43bn could be shifted from being state debt to the books of the banks. The Government has twice attempted get support on measures to help the banking sector and reduce the taxpayers' repayments of banking debt.
The deal the Government wants includes reducing the amount by shrinking and pushing out the repayment of bank debt and securing cash flow for banks on a longer-term basis.
The Taoiseach floated the idea of pushing out the annual €3bn repayment on Anglo Irish Bank at the start of this year, but didn't table it formally.
It came after the complete failure of an attempt last year to secure longer-term cash flow for the banking system from the European Central Bank.
The Government still wants the EU to provide billions to the banks for up to five years.
Last year, Mr Kenny naively brought up this issue of medium-term liquidity, but his request was ignored.