BOTH INCOME AND corporation tax intakes were ahead of last year’s figures and above target, according to the latest revenue data from the Exchequer.
VAT – the other of the main categories – also performed well.
Tax revenue in the first three months of 2012 totalled €8.72 billion, up by €1.2 billion on what was collected in the corresponding period of 2011.
The intake is €809 million, or 10 per cent, more than expected. However, the Exchequer warned that two factors had to be considered when looking at the numbers.
Some €251 million in corporation tax receipts which were originally due for payment in December 2011 were not received until January. That said corporation tax was ahead of target at end-March even after allowance is made for this. A contributory factor is a lower than expected level of repayments to companies.
There may be a negative impact seen in future months because of such repayments to companies.
Secondly, the 25.8 per cent year-on-year increase in income tax is the result of a technical reclassification of receipts from employers which they had previously returned as PRSI. The €739 million jump massaged the actual 3.5 per cent which income tax collections were ahead of end-March targets.
Minister for Finance Martin Noonan said given certain policy changes and the continued economic uncertainty, the strong performances of VAT and income tax were particularly welcome.
VAT also up, but excise disappoints
VAT receipts in the month of March, the first to reflect directly the impact of the 2 per cent standard VAT rate increase were €128 million better than planned. VAT is €101 million (3.2 per cent) ahead of target and €182 million (5.8 per cent) up on the same period in 2011.
One category that did disappoint the books was excise duties which recorded a €28 million shortfall in the month, as well as being €42 million short for the first quarter. They are also slightly down (€24 million) on a year-on-year basis.
Each of the four smaller tax-heads – stamps, CGT, CAT and customs – are generally performing close to profile at this point in the year, the Department of Finance said in a statement.
Noonan said the figures highlight a “strong start to the year” and the “robust nature of the Budget 2012 tax forecasts”.
Non-payment of Promissory Note
Unfortunately, increased tax and non-tax revenues were offset by higher debt servicing costs and higher net voted current expenditure. Overall, net voted expenditure at the end of March was €11.6 billion – €586 million up year-on-year and €501 million ahead of target.
Debt servicing costs were about €70 million less than profiled at €2.4 billion. However, they were €1.5 billion higher than last year because of the timing of the Sinking Fund payment to coincide with a Government bond maturity.
However, the Exchequer deficit at end-March 2012 was €4.3 billion, compared to €7 billion in the same period last year, mainly because of the non-payment of the €3.1 billion Promissory Note due on 31 March.
Net voted capital expenditure at end-March, at €531 million, was €32 million below expectations and €63 million down year-on-year.
Chambers Ireland noted its disappointment at seeing another fall in Capital Expenditure. Chief executive Ian Talbot said the reductions have a “direct impact of reducing stimulus for the domestic economy”.
“Government needs to play its part and drive capital investment rather than relying on the easy option of cutting capital to offset inability to keep current spending within target…The domestic economy needs more support to drive the velocity of money and activity levels. Therefore capital spending cannot be allowed to dip below targets,” he said.
Confirmed: Noonan announces deal on promissory notes>