Sunday 18 February 2018

Exchequer returns on target

But Noonan warns cabinet colleagues job is 'not even half-done'

Thomas Molloy

Exchequer returns for the first half of the year show the Government tax take and spending plans are broadly in line with expectations.

The Government remains on track to meet targets for the entire year despite poorer-than-expected VAT and corporation tax receipts. This means no extra measures will have to be taken before December's Budget to keep spending in check.

Yesterday's exchequer figures showed that the Government's total income from taxes was €15.3bn; less than one percentage point below the targets set out in the December Budget.

The largest contribution came from income tax with the Government taking €6.03bn from people's pay packets in the first six months of the year. This was 21.5pc more than the in the same period last year, as the effects of the universal social charge took effect.

Reflecting the continued weakness in consumer spending, yesterday's figures showed that income from VAT was 2.6pc behind target. With the stuttering economy also hitting company profits corporation tax was 7.6pc less than expected. Excise duty was 3.7pc ahead.

The deficit -- the gap between the tax take and spending -- was €10.83bn compared to €8.89bn half way through last year.

The figure was higher despite the Government's spending cuts as the Government paid out €3.1bn to clean up Anglo Irish, Irish Nationwide and the EBS building society.

The deficit would have fallen by €1bn without this payment.

The amount of interest paid on our debts combined with the money paid to prop up Anglo, Nationwide, and the EBS equalled the total amount of income tax paid so far this year.

Speaking at the publication of the figures, Finance Minister Michael Noonan warned that a further tough budget could be expected in December when the Government looked to make up to €4bn in savings.

"That's going to be difficult. A lot of the low-hanging fruit has been picked in terms of government programmes so next year's cutbacks will be more difficult to achieve and yet they're vitally important," he said.


He said there was "nothing in the figures that would alarm us to think we won't reach the end of the year on target" but added that he would be telling his colleagues that the job wasn't "even half-done yet".

On the spending side, total expenditure was up 1.9pc at €21.9bn. This was 1.5pc less than the Government had forecast. Capital spending was €124m or 6.4pc less than budgeted.

Many departments such as agriculture, tourism, and foreign affairs have slashed spending but the big three spending departments -- health, education and social welfare -- continue to spend more than they did this time last year and all three have boosted spending.

Yesterday's figures will be closely watched by economists here and overseas.

Alan McQuaid of Bloxham Stockbrokers said, before their publication, that they were the most important economic indicator published so far this year.

After publication, Mr McQuaid described the figures as "broadly in line with expectations" but said he remained worried about the overall weakness in domestic demand and forecast an Exchequer deficit of €18.6bn or slightly higher than the government target.


Irish Independent

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