Ireland – Tax to September 2012

DAN O’BRIEN, Economics Editor

Tax revenues grew strongly last month, possibly signalling the
reversal of a trend towards faltering tax returns in evidence since
the spring.

The latest exchequer returns, published by the Department of Finance,
show tax receipts were 12.5 per cent higher in September this year
compared to the same month last year. This followed two consecutive
months of shrinking revenues.

For the first nine months of the year total tax revenues stood at
€26.1 billion, up €2.02 billion (or 8.4 per cent) on the same period
last year. When adjusted for one-off factors, the underlying increase
was somewhat smaller, at an estimated 6.2 per cent year-on-year.

Revenues also exceeded department projections for the nine-month
period, coming in €385 million (1.5 per cent) ahead of forecasts.

Income tax – the largest source of tax revenue – was €101 million (1.0
per cent) ahead of projections at the end of September, and is up just
over 9.5 per cent year-on-year on an adjusted basis.

Value added tax – the second biggest revenue source – was €94 million
(1.1 per cent) ahead of target for the first nine months of the year
cumulatively, and up €264 million (3.3 per cent) year on year.

On the spending side, total net voted expenditure, at €33.2 billion in
September, was €338 million (1.0 per cent) ahead of projections. In
year-on-year terms, net voted expenditure is €105 million (0.3 per
cent) below the same period in 2011.

Overspends were recorded at the Department of Social Protection (€403
million or 4 per cent) and the Department of Health (€285 million or
3.1 per cent).

In a joint statement, Minister for Finance Michael Noonan and Minister
for Public Expenditure and Reform Brendan Howlin said: “The tax base
is growing, the majority of departments are managing expenditure
within allocations and where there are overruns action is being taken
to bring these under control. All Departments must take the necessary
measures to deliver services within their 2012 allocations”.

The ministers said: “Overall, we are on track to meet our budgetary
targets for the second consecutive year and September 2012 is the
third month this year in which Exchequer revenues exceeded
expenditure. This last happened in 2007.”

Ulster Bank said it was encouraging that VAT receipts were stronger
last month. “September is among the three most important months in the
year for VAT receipts and so, even thought the monthly overshoot was a
modest €12m, it certainly helps the overall picture when one of the
key revenue sources performs ahead of plan,” it said.

The bank said the overspend on health of 3.1 per cent compared to a
1.5 per cent overrun in August and “points to some further slippage in
spending restraint in the department last month”.