The Irish Exchequer deficit at end-February
2011 was €1.94bn compared to €2.41bn in the corresponding period in 2010. Tax
revenues were up 2.2%.
The €462m improvement in the Exchequer
deficit was due primarily to tax revenues being up €104m year-on-year, net voted
expenditure being €171m lower, Exchequer debt servicing costs being some €259m
lower (see explanation below), offset to some extent by a reduction in capital
receipts of €81m.
Tax revenues at end-February amounted to
€4.84bn - - up €104m or 2.2% above the same period in 2010. Year-on-year
increases in income tax -- primarily due to the introduction of the
Universal Social Charge (USC) and other Budget 2011 measures - - and excise
duties offset relatively minor year-on-year declines in VAT and corporation
Tax revenues were €128m behind target at
end-February, primarily due to a VAT shortfall of €119m. Following a
relatively strong performance in the VAT-due month of January, the non
VAT-due month of February was weak. Taken together VAT receipts in January
and February were slightly below the corresponding period last year.
The Department of Finance said the income
tax measures introduced in Budget 2011, including the new USC impacted on
tax revenues for the first time in February. Income tax receipts were up 25%
year-on-year in the month albeit slightly behind target at end-February
(-€45m). PAYE receipts in the month of February amounted to €676m, some €38m
or 6% up year-on-year. While PAYE receipts in February show the impact of
the income tax measures introduced in Budget 2011, they do not include
receipts from the USC and therefore allow for a comparable year-on-year
analysis to be made.
Excise duties were €43m or 7.2% above
target in the first two months of the year. Corporation tax receipts were
€23m below target but the first significant payment dates for corporation
tax in 2011 are not until the May/June period.
Total net spending at end-February, at
€7.02bn, was €171m or 2.4% down year-on-year. Net capital expenditure was
€392m or 52.4% down year-on-year whereas net voted current spending was up
€221m or 3.4%. The year-on-year comparison for net voted current spending is
impacted upon by the reclassification of health levy receipts to form part
of the new USC. This has the effect of increasing net voted current
Total net spending was €290m or 4% below
target. Net voted current expenditure was €244m or 3.5% behind profile with
the main underspend on the Agriculture, Fisheries and Food Vote, due to the
earlier than expected payment of receipts from the EU.
Net capital expenditure was €47m or 11.6%
down on profile at the end of February, primarily due a €28m shortfall in
expenditure of the Transport Vote.
The Department said the Exchequer debt service outturn in the
period to end-February was €104m, down some €259m year-on-year. However, the
department said the majority of the funds used to service the national debt in
the early months of 2011 are coming from the Capital Services Redemption Account
(CSRA) rather than the Exchequer. The use of the CSRA in this way was flagged at
Budget time. The full debt service cash cost (including CSRA) was €626m, some
€264m above the figure at end-February 2010, reflecting the servicing of the
additional debt burden.
Exchequer Statement End February
End February Analysis of Tax Receipts
End February Analysis of Net Voted Expenditure
|Source: Davy Research |
Davy economist, Conall MacCoille,
Tax revenue behind target
Tax revenues at end-February
were €4.84bn, 2.2% higher than the same period in 2010 but €128 behind the
government tax projections for this stage of the year;
The shortfall was concentrated
in value added tax receipts which were €120m behind expectations. This
weakness raises concerns about the strength of consumer spending in 2011;
Income tax and corporation tax
receipts were €45m and €23m behind but were partly offset by higher than
expected excise duties. Overall tax revenue remains broadly on track to meet
the government's targets.
Budget measures begin to push
up on tax revenue
Tax measures introduced in
Budget 2011 including the new universal social charge had an impact for the
first time on the February receipts;
Income tax receipts were 25%
higher than in the corresponding month of 2010, albeit slightly behind the
expected target for this stage of the year.
Government expenditure cuts
are being implemented
Voted expenditure was €7.0bn at
end February, €2.4% lower than the corresponding period of 2010;
Voted capital expenditure was
52.4% lower than in 2010;
Overall voted expenditure was 4%
lower than the expected target for this stage of 2011.