Government’s finances on target for first time this year

The Government’s finances are on target for the first time this year, the latest exchequer returns reveal.

The figures for May show the Government has collected €20.5 billion in taxes so far this year.

This was 5 per cent up on last year but also ahead of the department’s target for the period.

While income tax and VAT brought in slightly less than expected, the Government’s total tax take was boosted by a better-than-expected return from corporation tax, which has generated record revenues in recent years.

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Income tax, the largest tax head, generated just under €8.1 billion, which was almost in line with expectations.

However, VAT, which reflects conditions in the retail sector, came in at €6.9 billion, which was 3.4 per cent or €105 million less than expected.

Corporation tax generated just over €2 billion, which was €247 million or 13.5 per cent ahead of target.

The other main tax, excise duty, came in at just over €2 billion, which was 3.2 per cent off target.

Overall, the figures pointed to an exchequer deficit of €24 million for May, compared to a surplus of €383 million at the same point last year.

Exchequer expenditure, meanwhile, amounted to just under €24 billion for the period.

Peter Vale, tax partner with Grant Thornton described the latest the figures for May "were another mixed bag, with good numbers interspersed with some slightly concerning returns".

“Of most concern is that the VAT figures for the month were 3.4 per cent behind target, evidence of weaker than expected consumer spending,” he said.

“Income tax figures for the month were on target, although it’s surprising that income tax receipts haven’t overshot forecast given the strong labour market,” he said.

Merrion analyst Alan McQuaid said: "All in all, the figures suggest that Ireland remains on course to have a General Government Deficit close to zero in 2018."