Irish Public Finances: There was an Exchequer surplus of €641m in 2015 to end May compared to a deficit of €3.5bn deficit in the same period last year. Tax revenue in the first five months of the year was €734m ahead of the Budget 2016 target.
The Department of Finance said that the improvement in the Exchequer balance is driven by increased tax and non-tax receipts and a number of one off transactions such as the transfer from the NPRF (National Pensions Reserve Fund) to the Exchequer earlier this year and the sale of the PTSB contingent convertible capital notes — a State investment in PermanentTSB bank.
Tax revenue of €17.3bn was collected to end-May 2015. This represents a year-on-year increase of €1.7bn (10.9%) and is €734m (4.4%) above target. Tax revenues for the month of May were up €216m (5.1%) against the monthly target. Income tax receipts of €7.1bn were collected to end-May 2015, a year-on-year increase of €440m or 6.7%. For the month of May, income tax was on target.
The first five months of the year saw VAT receipts of €5.7bn collected which represents an increase of €496m or 9.5%, when compared to the corresponding period last year and is €90m (1.6%) above target. VAT receipts for the month were €133m (8.6%) above target, which are reflective of the March/April trading period.
Non-tax revenues, at €2.1bn were up €475m (28.3%) in year-on-year terms. The Department said the primary reason for this is the increased surplus income from the Central Bank of c. €500m. Capital receipts at end-May of €4.5bn up €1.5bn (48.0%) year-on-year,
Overall net voted expenditure for end-May 2015, at €17.0bn, was 1.8% or €306m below target and €165m (1.0%) lower in year-on-year terms.
Total Exchequer debt servicing costs at end-May 2015 were €3.4bn.
Conall Mac Coille, chief economist at Davy, commented: "Tax revenues in May were €216m, or 5%, ahead of Budget forecasts. Including outperforming PRSI social insurance receipts and another €300m positive surprise from the Central Bank, total revenues are now €1.3bn ahead of Budget targets. In this context, the government’s April Stability Update projections for the deficit to equal 2.3% of nominal GDP already look dated – based on tax revenues exceeding the Budget 2015 forecast by €1bn in the entire year. So today’s out-turn reinforces our view that the deficit will fall below 2% of GDP in 2015."
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