THE FIRST DOCUMENTS released for Budget 2013 reveal that Ireland’s tax take for 2012 is likely to miss its targets – despite Exchequer income being head of monthly targets for most of this year.
The Department of Finance’s estimates for government spending and income for 2013 also outlines areas where the government expects to take in extra cash in 2013 – and points to the probability of cutbacks in income tax credits in Wednesday’s Budget.
The documents, published this morning, show that the government now expects to take in a total of €36,165 million this year – about €210 million (or 0.59 per cent) less than it had forecast at the beginning of the year.
This is largely down to a shortfall in tax receipts from the self-employed, and a shortfall in excise duty – which is set to be increased in Wednesday’s Budget.
VAT and corporation tax remain ahead of expectations, however, while income tax receipts are likely to be only marginally lower than had been expected when last year’s Budget was announced.
Though the figures for 2013 project a 4.5 per cent increase in income tax receipts, the Department of Finance said its 2013 projections were based on the current legal situations and did not account for any measures that may be introduced in Wednesday’s Budget.
However, previous Troika documents outlined that the Government would try to cut spending by about €2.25 billion, partly through a reform of the income tax system.
Having ruled out the introduction of any new tax bands, and with the government having previously committed to not raising income tax rates, this is likely to mean a reform of the tax credit system and deciding not to adjust tax bands, which will bring more people into the tax net.
The documents also show Ireland’s Budget deficit for 2012 is likely to stand at 8.2 per cent of GDP, well inside the 8.6 per cent target set down by the Troika programme.
However, the current projections for 2013 show the deficit standing at 8.9 per cent of GDP – largely because of a €3.1 billion increase in government spending, split roughly equally between capital (one-off) and current (day-to-day) spending.
Again, however, these figures do not include the effects of measures to be confirmed on Wednesday, such as the new property tax.