Tax revenues for first six months of the year €500m ahead of target
TAX revenues for the first six months of the year were ahead of target by €500m -- prompting Finance Minister Michael Noonan to say he is confident of meeting his budget reduction targets for the year.
The better-than-forecast tax take was again driven by income tax and consumer spending. Income tax came in 3.1pc ahead of target, and VAT was in 0.6pc better than forecast. Corporation tax was 16.1pc ahead.
"Tax revenue is on an upward trajectory and, at this point, I am confident that our overall tax revenue target for 2012 will be achieved," Mr Noonan said.
However, while the tax take is better than forecast, spending is also much higher as the Departments of Health and Social Protection continue to breach spending limits.
The figures show that total health spending was 2.2pc above target in the first six months, while welfare was 4.7pc higher despite unemployment remaining largely in line with forecasts.
Overspending in these two departments has been criticised by the troika and will be discussed in the latest inspection, which began yesterday.
The "spending over-run is becoming more concerning," Davy Stockbrokers economist Conall MacCoille said.
In all, the Government collected just over €17bn in taxes in the first six months, an increase of 8.3pc on the same period in 2011.
"If this trend is maintained in the July-December period, then there's no reason why the underlying budget deficit won't be closer to 8pc than the 8.6pc originally targeted," Bloxham Stockbrokers' chief economist Alan McQuaid said.
The single biggest reason why revenues are ahead of target is income tax.
We shelled out 13.5pc more in income tax than this time last year despite the Government's decision to allow some low-paid workers not to pay the universal social charge.
The budget deficit for the first half of the year fell to €9.4bn from €10.8bn in the same period last year, but the main reason for this was the Government's sleight of hand when it came to repayment of the Anglo Irish debt in March.
Without the deal to reschedule a €3.1bn payment, the deficit would have widened thanks to yet another injection into the banks following the €1.3bn purchase of Irish Life & Permanent's life and pension business.
The cost of servicing the national debt to the end of June was €4.5bn, or €2bn higher when compared with the same period last year, although the real figure may be closer to €800m once some distortions are removed.
The exchequer returns also show a €450m payment to the insurance compensation fund.
The money was paid following the Quinn Insurance debacle, which forced the State to make eye-watering payments from the fund to increase the reserves of Quinn Insurance, now owned by US firm Liberty.
In a rare piece of good news for drivers, the figures show that the amount of cash raised from motoring fines sank drastically from €6.6m last year to €3.9m this year.