Mixed reaction to exchequer return figures

There was mixed reaction yesterday to the news that tax revenues for the State are running 1 per cent ahead of targets.

Some analysts suggested that the exchequer returns showed the Government would have limited scope to cut taxes or increase spending in budget 2014.

Peter Vale, tax partner at Grant Thornton, said the returns showed the public finances were in a more robust state now than at the start of the year but that there would likely be no scope for a reduction in any headline income tax rates until next year at the earliest.

However, Davy stockbrokers chief economist Conall Mac Coille said the half-year figures indicated the Government would likely beat its deficit target by about 0.5 per cent of GDP in the first six months of the year.

“[The] exchequer returns show taxes and spending closely in line with budget targets . . . spending discipline is being maintained, with gross current expenditure 0.7 per cent inside the budget 2013 plans,” he said.

'Impressive outturn'
Philip O'Sullivan of Investec Ireland said the exchequer returns showed an "impressive outturn" with tax revenues and discretionary spending running a combined €700 million better than anticipated in the period to the end of June.

“Bringing it all together, this is a good result that provides comfort in terms of the fiscal outlook,” he said.

Alan McQuaid of Merrion Stockbrokers said the figures indicated it was likely that the budget deficit outturn as a percentage of GDP would once more be lower than the figure officially targeted. He said this would boost the chances of exiting the EU-IMF bailout on schedule.