INCOME TAX revenues rebounded in April, putting the total tax take for the year to date ahead of target by 1.1 per cent.
Exchequer returns, published by the Department of Finance yesterday, show that tax revenues at the end of April stood at €9.6 billion, some €108 million higher than targets set by the department in January.
Income tax receipts, which were behind target, came in ahead of expectations by €184 million in April and are now 1.5 per cent higher than forecast, with €4.1 billion collected in the year to date.
However, this turnaround related largely to earlier than expected receipts from Deposit Interest Retention Tax (Dirt), which falls under the income tax heading, rather than to improved fortunes in the labour market.
Three of the “big four” tax categories – income tax, corporation tax and excise duties – are now above target. However, VAT continues to lag. With almost €3.4 billion collected in the year to date, VAT receipts remain 3.1 per cent or €107 million behind target and are down 1 per cent on the same period last year, reflecting the ongoing fragility in consumer spending. However, the shortfall in VAT has narrowed since March.
Income tax receipts are up 19.6 per cent on last year, with the rise largely attributable to the introduction of the Universal Social Charge (USC). Stripping out this effect, PAYE receipts in the first four months of the year arrived at €2.8 billion – up 4.9 per cent on the same period in 2010.
Overall tax receipts are up more than €500 million or 6.7 per cent on last year. This is primarily due to the introduction of the USC and other budgetary measures.
Net government expenditure as of the end of April stood at €14.8 billion, up €480 million or 3.3 per cent year-on-year. The reclassification of health levy receipts as part of the USC has the effect of increasing net expenditure. If this is taken into account, net expenditure at the end of April was “effectively flat” year-on-year, the department said.
On an annual basis, current or day-to-day spending was up €916 million, a rise of 7 per cent, while capital expenditure was down €436 million, a decline of almost 32 per cent.
Spending is also coming in under target for the year to date, by a sum of €277 million, or 1.8 per cent. This was mainly the result of lower than expected current spending at the departments of agriculture, foreign affairs and social protection.
Total debt servicing costs in the first four months of the year, including funds used from the Capital Services Redemption Account, were €2.7 billion.
The exchequer deficit at the end of April stood at €9.9 billion, compared with almost €7 billion at the same point in 2010. The widening of the deficit is due to the €3 billion paid to Anglo Irish Bank and Irish Nationwide Building Society.
Speaking in the Dáil yesterday, Minister for Finance Michael Noonan said it remained the case that “further significant budgetary adjustments” would have to be made in the coming years.
Davy Research economic analyst Conall Mac Coille described the exchequer tax data as “a pleasant surprise” and said tax revenues were “more likely to meet the targets set out in Budget 2011”.
