Exchequer gets €2.5bn boost from sale of AIB stake

Selling 28 per cent of AIB helped boost State coffers by more than €2.5 billion, figures released on Wednesday show.

The Republic’s exchequer had a surplus of €3.37 billion at the end of July, more than four times the €862 million recorded at the end of the same month last year.

A Department of Finance statement confirmed that the €2.505 billion improvement was largely due to the sale of more than 28 per cent of AIB early in the month, which raised a total of €3.4 billion.

The same bank’s repayment of €1.6 billion in bonds to the Government also increased exchequer returns last July.

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Excluding those gains, the department said increased tax revenue and lower interest on the national debt left the State €671 million better off than in July 2016.

The Government collected €28 billion in taxes in the seven months to the end of July, €1.2 billion more than during the same period last year. Overall, the figure was 0.8 per cent short of its target.

Government spending totalled €25.5 billion in the first seven months of 2017, 4.7 per cent more than during the same period in 2016, but €244million short of what it expected.

Tax revenues for last month were €4.4 billion, which was €119 million below the Government’s target, but €309 million more than the amount collected in July 2016.

Income tax

Workers paid €1.67 billion in income tax in July, 10.2 per cent ahead of the same month last year. The €10.7 billion that they have contributed so far this year was €208 million less than forecast.

Peter Vale, tax partner with Grant Thornton, noted that strong employment numbers were not feeding into exchequer figures.

“While a greater number of part-time jobs has been mooted as an explanation, it’s worth noting that the income tax figures are well ahead of last year, despite lower income tax rates and a much-reduced Dirt take,” he said.

Businesses paid €86 million in corporation tax on their profits. This was €34 million less than expected. However, the department said that the €3.6 billion collected so far this year was just 0.4 per cent s short of its target and €311 million more than at the same point in 2016.

Larger than expected VAT repayments to businesses meant that the €1.89 billion collected trailed the Government’s target by €129 million.

In contrast, the department said that the €8.8 billion collected for the year to date was 10 per cent up on 2016 and slightly ahead of expectations.

Ian Talbot, chief executive of lobby group Chambers Ireland, warned that the strong performance should not lead to complacency.

“ Budget 2018 is an opportunity for Government to invest any surplus revenue in economic and social infrastructure to drive growth, improve the quality of life for citizens and to address the challenges that threaten to undermine economic competitiveness,” he said.