Irish Exchequer Returns: Tax revenues were €263m or 1.4% above target at end-July, according to the latest statement on public finances issued today. Revenues at end-July, at €18.6bn were €1.5bn or 8.6% higher than in the same period last year. Meanwhile, debt servicing or interest paid on the national debt rose €750m.
The Exchequer Returns are not a full statement of the public finances. Social insurance (PRSI) receipts/payments are not included and bizarrely, local government is also ignored.
The Exchequer deficit at end-July 2011 was €18.9bn compared to a deficit of €10.2bn in the first seven months of 2010. The increase in the deficit was due to non-voted capital expenditure banking related payments, including €3.1bn in Promissory Note payments to Anglo Irish Bank, INBS and EBS, and just over €7.5bn in once-off payments relating to the recapitalisation of the banking sector announced following the PCAR stress tests at end-March. Excluding these payments, the Exchequer deficit fell by almost €2bn.
In July, the year-on-year increase in tax revenues was due primarily to higher income tax receipts, arising from the Budget 2011 measures, including the introduction of the USC (universal social charge). Excise duties, corporation tax, customs duties and stamp duties.
Three of the “big four” taxes - - income tax,
corporation tax and excise duties - - recorded surpluses in the first seven
months of the year. Income tax was €160m or 2.2% above target at end-July.
Excluding the beneficial impact of earlier than expected DIRT payments, both in
April and July, income tax was a little below target in the first seven months.
That said, the underlying performance of income tax in recent months has been
encouraging, with the targets for both June and July marginally bettered.
Corporation tax was €93m or 6% above target at end-July. The Department of
Finance said the very large surplus in the month of July arose partly because of
a delay in payments from May. While this was expected, the extent of the delayed
payments was in excess of what had been anticipated.
Total net voted expenditure at end-July, at €25.7bn, was €224m or 0.9% up year-on-year. Net voted current spending was up €813m or 3.5% but net voted capital expenditure was €589m or 26.4% down. Adjusting for the reclassification of health levy receipts to form part of the USC which has the effect of increasing net voted expenditure, it is estimated that total net voted expenditure fell 2.6% year-on-year.
Compared to target, total net voted expenditure was down €536m or 2% at end-July. Net voted current expenditure was €341m or 1.4% below profile. The main underspend was on the Social Protection Vote (-€125m) and was due to higher than expected PRSI receipts which more than offset excess expenditure across a number of schemes. The other main underspends were on the Education & Skills (-€116m) and Agriculture, Fisheries & Food (-€95m) allocations in the Budget. These were largely due to timing issues with respect to certain payments and receipts, and offset pressures arising in other areas of expenditure.
Net capital expenditure was €195m or 10.6% below target at end-July, largely due to shortfalls in the expenditure of the HSE, Environment and Agriculture Votes of €45m, €43m and €30m respectively. These shortfalls against target were largely caused by timing factors and net voted capital spending is expected to be in line with target for the year as a whole.
The Department of Finance said total debt servicing expenditure at end-July, including funds used from the Capital Services Redemption Account was just over €3bn. Excluding the sinking fund payment which had been made by end-July in 2010 but which has not yet been made in 2011, debt servicing costs to end-July 2010 were some €2.25bn. The year-on-year increase in comparative total debt servicing expenditure therefore was €750m.
Conall Mac Coille, chief
economist at Davy, commented:
Tax revenue 1.4% ahead of target, up 8.6% on the year
Most tax headings now ahead of target
Spending remains below the Budget 2011 target profile
Underlying exchequer deficit down €2bn over 2010
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