Public finances on target in first six months

The public finances were largely on target in the first half of 2013, according to the Government’s public spending and tax figures. The Department of Finance added that EU-IMF bailout targets were met for the 11th consecutive quarter.

Commenting on the end of June returns, Minister for Finance Michael Noonan and the Minister for Public Expenditure and Reform Brendan Howlin said that despite the on-target performance, with "borrowing in excess of €1 billion each month we must continue with our efforts to reduce the deficit to below 3 per cent of GDP by 2015."

Expectations

Tax and non-tax Exchequer revenue stood at €22 billion in the first six months of 2013, up on in the same period in 2012.

Tax revenues alone were 3.4 per cent higher than a year earlier and 1 per cent above expectations at the beginning of the year.

Among the only eye-catching figures in yesterday’s data was VAT receipts in June coming in 18 per cent below target and 11 per cent below the same month last year. Cumulatively over the first six months of the year, VAT revenues are 3 per cent below target.

This reflects weakness in retail sales and consumer spending in the first half of the year.

Focusing on the positives, Mr Noonan said “the performance of corporation tax is impressive and the performance of income tax, the largest source of revenue, is reflective of the gradual improvement in employment levels evident in recent months”.

A Department of Finance official who provided a short briefing on the figures said there was no reason to believe that property tax revenues would not come in on target in 2013. The government expects to raise €250 million from the tax this year.

Spending

He went on to say that 88 per cent of properties had registered according to the best available estimates.

Exchequer spending stood at €28.6 billion in the first six months, down €1.5 billion, or 6.5 per cent, on the same period last year. Of the 16 government departments, 15 had reduced spending, the figures show.

The Exchequer deficit at end June 2013 stood at €6,595 million, which is €2,848 million lower than the same period last year.

The gap is significantly smaller than expected, mostly owing to a number of one-off factors, including revenues raised from the sale of Bank of Ireland shares earlier this year.