Exchequer tax take below target

The Government remains on target to meet its annual budgetary requirements at the half-year stage despite poorer-than-expected VAT and corporation tax receipts.

The latest exchequer figures, published today by the Department of Finance, show that tax revenues at the end of June were just under €15.3 billion, some €115 million or 0.7 per cent below the target set by the department in January.

Reflecting the continued weakness in consumer spending, VAT receipts were behind target by €134 million or 2.6 per cent in June, with €5.07 billion collected in the year to date.

Corporation tax receipts were also behind target by €116 million or 7.6 per cent at €1.42 billion.

On a positive note, income tax receipts came in almost exactly on target in June, with €6.03 billion collected in the year to date.

The Exchequer’s income tax take was up 21.5 per cent up on the same month last year, reflecting the introduction of the Universal Social Charge.

The other “big four” tax category - excise duties – was the only one to come in significantly ahead of expectations at €2.2 billion, €79 million or 3.7 per cent above target.

The exchequer deficit for the first six months of the year stood at €10.8 billion, compared to €8.9 billion at the same stage last year.

However, when the €3 billion used to recapitalise Anglo Irish Bank, Irish Nationwide and EBS is stripped out, the deficit actually fell by €1 billion.

Minister for Finance Michael Noonan predicted Ireland would meet its year-end exchequer deficit target of €18.2 billion or 10 per cent deficit to GDP ratio - set out in the EU-IMF rescue plan.

The half-year snapshot of the public finances showed total spending in the year to June was €343 million or 1.5 per cent below target.

A breakdown of the figures  indicated current spending was €219 million or 1.1 per cent below profile due to higher-than-expected PRSI receipts.

Capital spending was €124 million or 6.4 per cent less than budgeted due to shortfalls in the health, environment and agriculture spends.

Total net expenditure in June stood at €21.9 billion, some €399 million or 1.9 per cent up year-on-year.

Much of the increase, however, was put down to the reclassification of health levy receipts as income tax, under the universal social charge, which had the effect of increasing expenditure.

Mr Noonan warned that a further tough budget can be expected in December when the Government looks to make up to €4 billion in savings.

"That's going to be difficult and it's going to be difficult on Government departments. A lot of the low hanging fruit has been picked in terms of Government programmes so next year's cutbacks will be more difficult to achieve and yet they're vitally important," he said.

“I’ll be saying to my colleagues in Government the job isn’t even half done yet," he added.