January tax take up 5pc on last year, Exchequer returns show
THE tax take in January will be up 5pc compared with last year after one-off payment processing issues have been accounted for.
That's according to the Department of Finance, which said official Exchequer return figures showing tax income plunged 17pc in the first month of the year are a result of changes to payments systems that delayed some returns.
For example, income tax is down €150m year on year as a result of the new payment scheme. But €175m in income tax was received on the first banking day of February, in comparison with €25m on the same day last year as the receipts rolled in later than usual.
The fall does not reflect a true decline in tax receipts, the department said.
In fact, more tax was collected for January than the same period in 2013, with "robust" income tax receipts reflecting the increase in employment, according to the department.
The tax take was up about 5pc, with experts hailing the figures as representing a good start to the year.
Peter Vale, tax partner at accountants Grant Thornton, said the figures suggested consumer spending was strong last month.
"There has been a trend in recent months of people diverting savings to spending, influenced by low deposit rates, and higher DIRT tax, but primarily by a renewed sense of confidence," Mr Vale said.
"Underpinning this is employment and earnings growth, translating into increased activity in the domestic economy.
"January appears to demonstrate this trend has continued into 2014."
The first Exchequer data for 2014 was heavily distorted because of delays in receiving tax receipts due to the switch-over to a new European-wide payments system.
The changeover to the Single Euro Payment Area (SEPA) system caused a delay in receiving about €650m in tax receipts to the Exchequer.
Official figures show the State took in €3.1bn in the first month of the year, a decrease of €644m on the same period last year, according to the first set of Exchequer returns for 2014.
But returns for January, which showed that the tax take was down 17pc, are largely worthless as a source of data on the area because of the timing issue. The department said the money was coming in, even if it is later than usual.
Various categories of tax were affected including VAT, income tax and corporation tax, with some monies due under those categories delayed until February.
SEPA is a new EU regulation designed to simplify financial transactions and make doing business easier across Europe. But the department said that under the new payments regime, direct debits took seven business days to process, longer than usual.
January is a big month for VAT as it includes the impact of Christmas. Around €1.37bn was collected in VAT, down €372m year on year.
Public spending was up 3.8pc. Current spending was up 3.3pc, with the largest increase recorded in the Department of Social Protection.
The Department of Finance said this was driven by an additional weekly payday in January and had an impact on both contributory and non-contributory pensions and widow's/widower's pensions.
Alan McQuaid of Merrion Stockbrokers said it remained confident that the Government will meet its budget deficit target this year.