Monday 20 November 2017

Tax revenues came in 2.6pc behind target last month - but on target for year

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Colm Kelpie

Colm Kelpie

Tax revenues came in 2.6pc behind target last month, but are broadly on profile for the year to date.

Exchequer returns show that in the first seven months of the year the State brought in €28.04bn in taxes, €230m or 0.8pc behind target.

Income tax is almost 2pc behind where the Department of Finance expected it to be, but it stresses that it is up 4.2pc in year-on-year terms to €1.67bn.

VAT is 0.8pc above target, while corporation tax is 0.4pc below expectations.

The State finances moved largely into line in June following a weaker-than-expected start to the year, and that trend largely continued last month.

The repeated shortfall in income tax has reflected a problem in the model used to predict the impact of changes last year to the USC – a relatively new tax, rather than weakness in jobs growth, officials have said.

The shortfall is likely to be around €80m for the full year.

An Exchequer surplus of €3.366bn was recorded to the end of July.

This compares to a surplus of €862m in the same period last year. This year-on-year improvement is primarily due to the recent sale of more than 28pc of the State’s shareholding in AIB.

Overall, total net voted expenditure, at €25.507bn, was 0.9pc or €244m below target, but up 4.7pc or €1.138bn in year-on-year terms.

Peter Vale, Tax Partner with Grant Thornton, said the July figures are a bit of a mixed bag.

"The income tax figures remain something of an enigma, with strong employment data not feeding though as expected into the tax figures," he said.

"While a greater number of part-time jobs has been mooted as an explanation, it’s worth noting that the income tax figures are well ahead of last year, despite lower income tax rates and a much reduced DIRT take."

Ian Talbot, Chief Executive of Chambers Ireland said, there is no room for complacency.

"Budget 2018 is an opportunity for Government to invest any surplus revenue in economic and social  infrastructure to drive growth, improve the quality of life for citizens and to address the challenges that threaten to undermine economic competitiveness.”

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