Saturday 21 April 2018

Tax take misses target but on the rise in improving economy

Paschal Donohoe
Paschal Donohoe
Colm Kelpie

Colm Kelpie

The tax take for the first three months of the year is fractionally behind Budget targets.

Overall, the State collected €11.95bn up to the end of March - 1.2pc or €141m below what had been hoped.

But it is up 3.5pc, or €401m, on the same period last year.

The Department of Finance said the tax take was dragged down in part because of lower-than-expected income tax receipts from the self-employed.

Income tax receipts totalled €4.67bn overall, some €80m, or 1.7pc, behind target.

"The largest element to that [relates to] self employed income tax," said John Palmer, principal officer at the department.

"It's not something we're worried about at this time of the year. This time last year we collected about 5pc of self-employed income tax in the first quarter, compared to what we got at the end of the year."

VAT - a key marker of consumer spending - is on target, with receipts totalling €4.68bn for the first three months.

Excise, at €1.23bn, was down 4.8pc on where it had been expected, with receipts from oil and VRT down.

Stamp duties were down almost 12pc on the target, but up 35pc year-on-year.

Total net voted expenditure, at €11.177bn, was 2.4pc, or €272m, below profile, and up €416m, or 3.9pc in year-on-year terms.

Non-voted expenditure of €2.956bn was up year-on-year by 10.6pc, or €282m.

"This annual increase was primarily driven by a higher EU budget contribution due to both Ireland's increased share of EU budget obligations and the timing associated with the funds called up by the commission," the department said.

This time last year, the tax take was 2.4pc, or €282m, behind target.

Finance Minister Paschal Donohoe said the figures show solid growth in tax figures, which is underpinned by an improving economy.

But he said the Government would continue to focus on "prudent management" of the public finances.

Analysts broadly welcomed the data.

Peter Vale, tax partner at Grant Thornton, said one of the positives was the robust performance of VAT.

"There will be some concern at the fall in income tax receipts in March, blamed on a dip in returns from the self-employed sector," Mr Vale said.

"Lower than expected income tax receipts have been a feature of previous returns and (are) hard to rationalise against a strong labour market."

Conall Mac Coille of Davy said the biggest surprise was the 12pc fall in stamp duties.

"A key revenue-raising measure in last October's Budget 2018 was an increase in the commercial stamp duty rate from 2pc to 6pc," he said.

"However, the €40m shortfall will surely raise concerns that the Department of Finance may have overestimated the likely additional revenues from the measure."

Irish Independent

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