The Government will build a €525 million “buffer” into its 2016 forecast for corporate tax payments after concluding from
exchequer returns for November that receipts from the tax this year will exceed €7 billion.
Citing written Revenue guidance, Minister for Finance Michael Noonan has been insisting the “vast bulk” of the 2015 surge in corporate tax is likely to be repeated in 2016.
“The Revenue Commissioners have advised me that this over-performance is primarily related to improved trading conditions and is broad- based,” the Minister said, in response to the figures.
The November data, which showed monthly returns were €470 million ahead of target, put total tax collection €2.94 billion ahead of target in the first 11 months of the year.
Target eclipsed
The data shows that corporate tax receipts to end-November came to €6.36 billion. Payments were €2.32 billion more than forecast at the outset of the year, with November receipts eclipsing the target by €312 million.
However, Mr Noonan said on RTÉ television his budget day deficit target would still be realised even if €525 million in 2015 payments were not repeated.
The inclusion of this “buffer” follows a letter from Revenue chairman Niall Cody telling the Minister that all but €300 million of the 2015 corporate tax surge could be included in the 2016 forecast.
About €700 million in corporate tax payments is anticipated this month, well ahead of the €540 million forecast at the start of the year.
“In 2015 we will collect in excess of €7 billion in corporation tax,” said a department spokesman. The deficit target of 1.2 per cent would still be achieved next year even if this corporate tax rate were reduced by 7.5 per cent, or €525 million, he added.
As it stands, the rate of payments in all tax brackets suggests that target will be beaten by a wide margin.
A headline deficit of 1.7 per cent of economic output is in play for 2015, significantly less than the 2.1 per cent Mr Noonan forecast in his budget speech in mid-October.
Davy chief economist Conall Mac Coille noted the Revenue guidance but said the fact that corporate taxes were 58 per cent ahead of projections pointed to “extreme difficulty” in accurate predictions.
