NEW FIGURES RELEASED this evening show that Ireland has reduced its deficit to €14.9 billion at the end of 2012, compared with €24.9 billion in 2011.
The two main reasons for the decrease were the settlement of the 2012 IBRC Promissory Note payment with a government bond and the fact that the July 2011 banking recapitalisation payments were not repeated last year.
The figures also show tax revenue in 2012 at €36 billion, up 7.7 per cent on 2011 and €271 million ahead of profile.
Of the four main sources of tax revenue, VAT and corporation tax, recorded surpluses against target in 2012.
VAT intake was €176 million more than expected at €10.2 billion overall in 2012 which was described as “a very positive performance” by the Department of Finance with VAT having gone up from 21 per cent to 23 per cent last year.
A total of €4.2 billion was paid to the Exchequer in Corporation Tax last year, €196 million more than the government had anticipated.
Income tax and excise duties recorded large surpluses for December but over all were below what had been expected for the year with income tax €124 million lower than expected and excise duty €108 million below expectations.
December’s tax receipts came as a surprise, coming in €440 million above profile. Budget 2013 in early December had estimated a €210 million shortfall.
Health and welfare overspends
The majority of Departments came in at or below profile in terms of expenditure.
However, pressures on the Department of Health (which spent €12.7 billion overall) and the Department of Social Protection (which spent €13.9 billion) were offset to a large extent by savings in other areas.
Spending in health was €270 million over budget and social protection (welfare) was €560 million over budget. The two departments accounted for €26.9 billion of the €44.4 billion the government spent last year.
Over €3.4 million in Exchequer capital spend includes €107 million in capital carry over, which will be available for Departments to spend into 2013 but is included as Exchequer expenditure in 2012.
The Minister for Finance, Michael Noonan and the Minister for Public Expenditure and Reform, Brendan Howlin, said the end of December Exchequer returns shows the “continued improvement we are making”:
For each of the nine quarters since the Programme commenced in late 2010, we have successfully met all of these targets.We cannot lose sight of the fact that we continue to spend more than we collect in revenue.
The Exchequer deficit, at close to €15 billion in 2012, is too large and the Government remains committed to reducing it further in the coming years.
The two ministers insisted that “overall economic confidence is returning” and cited “positive” retail sales from the Christmas and New Year and export data as indicators of this.
But Sinn Féin TD Aengus Ó Snodaigh said: “Today’s figures show that the economy continues to flatline. Clearly austerity is not working and 2012 was another year wasted on this policy.”
- additional reporting from Hugh O’Connell