Exchequer returns on track for first four months
FINANCE Minister Michael Noonan's promise of no mini-budget this year looks set to be delivered, with new figures showing the public finances on track for the first four months of the year.
This is despite a difficult start to the year for the international economy, with both the eurozone and the UK reckoned to be in recession for the first quarter.
Government ministers hope that recent small signs of improved business confidence and consumer activity may translate into firm tax revenues for the rest of the year.
Exchequer returns published yesterday showed tax revenues in the first four months of 2012 were €370m (3.5pc) ahead of government expectations.
The actual increase in revenues over last April was €1.2bn, but the Department of Finance expects taxes from multinational companies to fall later in the year as they increase payments to parent groups.
For the first four months, revenues were some €470m higher than last year, reflecting increases in spending taxes imposed in the Budget, as well as buoyant corporate taxes.
VAT, which was hiked by two percentage points in the Budget, has so far raised €3.4bn for the Exchequer. Firms do not pay VAT in April and the department hopes to receive a further €1.5bn from purchasers this month. VAT receipts are ahead of schedule and up 2.8pc on the same period last year, which is on track for the Budget target of a 2.6pc increase for the year as a whole.
Income tax, which was not hit in the Budget, came in €160m above target -- a result described as "encouraging" by the Department of Finance.
Total government borrowing for the first four months of 2012 was €7.1bn, down from €9.9bn last year. The drop is largely due to the alternative arrangements to pay down €3.1bn of promissory notes issued to save the former Anglo Irish Bank from collapse.
Interest costs on the national debt were €28m less than expected, but up by €1.6bn on last year. However, the extra cost to taxpayers was put at €400m because of transfers from other government funds to pay lenders their interest.
While a mini-budget is not in prospect, there will be further squeezes. Day-to-day spending is 2.1pc ahead of the budget plan, with the Departments of Social Protection and Health both missing their targets.
Analysts said it was too early in the year to be definite, but the Government is on track to meet this year's hoped-for deficit of 8.3pc of economic output (GDP) -- which would beat the troika target of 8.6pc. "A 2pc overspend is relatively small and still could be clawed back as the year progresses," said Conall Mac Coille, chief economist at Davy stockbrokers.