Exchequer boosted by corporation receipts

A BUOYANT month for corporation tax receipts helped stabilise overall receipts in the important month of November, according to the latest exchequer returns.

Tax receipts for the first 11 months of 2010 arrived at €29.5 billion, about 1.6 per cent or €470 million ahead of projections, but down 4.1 per cent on last year’s performance.

A large surplus of €589 million in corporation tax receipts, which are running 19.1 per cent ahead of target, was partially cancelled out by a €356 million shortfall in income tax.

The Department of Finance attributed the weak performance in income tax to below target PAYE receipts and said income tax from self-employed people in the post-deadline month of November had performed well.

Income tax receipts came in 3.3 per cent behind projections and are down 5.9 per cent year-on-year.

The exchequer deficit stood at €13.3 billion as of the end of November, compared with €22 billion at the same point last year. The improvement is largely due to payments of €3 billion to the National Pensions Reserve Fund and €4 billion to Anglo Irish Bank, which were made in 2009 and not repeated in 2010.

On the spending side, total net voted expenditure at the end of November was €40.8 billion, which is €1.8 billion or 4.2 per cent below the same period in 2009.

Current or day-to-day expenditure is slightly below target at €36.4 billion, while capital expenditure, at just under €4.4 billion for the year to date, is €1.3 billion or 23 per cent below the corresponding period in 2009. Capital spending is also €851 million or 16.3 per cent below profile.

The Department of Finance said the expected savings in capital expenditure would be largely offset by the costs associated with the redundancy programme in the Health Service Executive.

Labour Party finance spokeswoman Joan Burton said the figures confirmed a “now entrenched Government ‘go slow’ on capital spending”.

Employers’ group Ibec said the higher-than-expected receipts from corporation tax, which yielded almost €3.7 billion in the first 11 months, were “the main positive” and emphasised “the importance of Ireland’s strong enterprise sector”.

However, Fine Gael finance spokesman Michael Noonan said the data pointed to “a deep divide” in Irish society, with income tax receipts suffering as a result of high unemployment while corporate profits exceeded expectations.

The Irish Tax Institute’s Mark Redmond said pay-and-file returns from the self-employed sector and small businesses appeared to have “held their own”. Feedback from tax consultants indicated that “only a minority” were struggling to pay in full, he added.