| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Economy Last Updated: Jul 3, 2014 - 9:33 AM


Irish Economy 2014: Tax revenues €500m ahead of target; Social Protection spend down €20m
By Finfacts Team
Jul 3, 2014 - 8:12 AM

Email this article
 Printer friendly page

Irish Economy 2014:  Department of Finance data on Wednesday showed an Exchequer deficit at end of June at €4,94bn, an improvement of €1.65bn compared to the first half of 2013. Both total tax revenue of €18,47bn and the net voted expenditure outturn are slightly better than targets in Budget 2014. While tax revenues are about €500m ahead of target, the fall in the Live Register by 36,500 in the year to June has only had a  €20m impact on the Social Protection budget.

Conall Mac Coille, chief economist at Davy, commented - - "Exchequer returns for June show the tax and spending arithmetic still looking better than expected heading into next year’s Budget.

Tax revenues continue to show strong growth and are approximately €500m ahead of target in the first half of 2014. Less favourably, current expenditure has overrun for the first time this year, led by problems in the Department of Health. That said, capital expenditure was €105m under budget.

The government finances are also benefitting to the tune of €222m in extra income from the Central Bank. Overall, the government deficit looks set to beat the 4.8% of GDP target set for 2014 to end close to our forecast for a 4.4% deficit this year. Overall, the exchequer balance is already around €1bn better than expected in H1 2014, approximately 0.6% of GDP – a fact that will be surely be seized upon as political cover to reduce this year Budget adjustment to around €1bn, below the €2bn originally planned. At face value, the revenue figures show deterioration in aggregate.

Income taxes (+€64m), value added tax (+€113m) and excise duties (+149m) are all showing strong growth and are ahead of target on the year. However, the Department of Finance has indicated that timing effects related to the Single European Payments Area (SEPA) delayed the collection of €250m of corporation tax receipts expected in June, but paid in early July. Once this timing effect is accounted for, tax revenues are about 2%, or €500m, ahead of target.

The underlying picture is that tax revenue growth remains robust and continues to beat expectations, suggesting buoyancy in the domestic economy. However, developments on the expenditure side are less favourable. In previous years a pattern has developed whereby tight expenditure discipline in most departments has compensated for persistent overspending in the Department of Health.

In H1 2014, health spending is already €200m, or 3%, over budget. Tighter controls on expenditure in Education and other departments have not been sufficient to offset the overrun in Health. Aggregate current spending is now over budget, albeit by only €10m. Moreover, spending in the Department of Social Protection is only marginally below expectations, by -0.2%, or €20m. It is surprising that greater savings on social spending have not been made. Live Register data (July 2nd) show the unemployment rate falling to 11.6% in June, far earlier than expected in Budget 2014. The Budget 2014 forecasts envisaged unemployment falling to 11.8% in 2015 and to 11.4% in 2016."

Peter Vale, tax partner at Grant Thornton commented: "This is yet another impressive set of figures, with tax receipts ahead of target and spending largely under control. The consistently positive news on the jobs front is translating into strong income tax receipts, 7.4% ahead of last year’s figures, although there was a slight weakening in the figures for June. We also know that people are spending more, reflected in strong VAT receipts, 7.3% ahead of last year.

There’s very little negative news in the figures although surprisingly corporation tax receipts were significantly below target. However once again the difficulties with SEPA have been identified as the reason and the shortfall is likely to be made up in the next couple of days. A real deficit would be a significant concern as the June payment is often a first instalment based on full year profit projections so lower than expected corporation tax receipts would reflect more negative profit estimates. Hopefully the Department’s predictions are correct and matters such as the patent cliff are not to blame.

As we are right in the middle of pre budget submission season, the Minister is receiving advice from all quarters as to the level of adjustment required in October. While some form of increased taxation is likely to be required next year, it also looks like taxpayers will be granted relief by way of increased credits or a widening of the tax bands. At this stage, a cut in income tax rates looks very unlikely, with a rate cut for 2016 probably the best we can expect.

International tax developments continue to be critical for Ireland given the importance of overseas investment to our economy. It’s quite possible that we’ll see some significant changes to the Irish tax regime in the October budget, although maintaining a competitive tax offering will continue to be a priority. Overall, the new global tax environment is likely to play into the hands of Ireland as it will put a much greater emphasis on real substance, something that should encourage multinationals to continue to look to Ireland for expansion."

Currently a firm may gain from either having substance or not -- why would firms relocate to Ireland if they have already chosen other locations for whatever reason?

US tax inversions screw-up Ireland's national accounts; Bring few benefits

Related Articles
Related Articles


© Copyright 2011 by Finfacts.com

Top of Page

Irish Economy
Latest Headlines
Finfacts launches new news site
Irish Farmers & Milk Prices: 'Shackles' off in April; Demanding safety-net in August
Irish pension managed funds returns at over 12% year-to-date in 2015
Irish chartered accountants' salary packages surge 13% in 12 months
Irish services PMI fastest rate since late 2006; Official data up only 2.4% in 12 months
Irish Economy: Tax €893m above target in year to July — €653m from corporation tax
Fact and Fiction: Time to review Ireland's economic statistics?
Irish M&A deals H1 2015: Dutch or UK firm acquires Irish firm for €32.6bn - they are both American
Irish manufacturing PMI strong in July
Irish Economy: Fall in GNP in Q1 2015; GDP rises
Irish Economy 2015: Central Bank lauds strong recovery; Time to start paying down debt
Irish Budget 2016: Ibec demands 20 tax cuts, spending and investment rises
Low pay in Ireland; Lowest social security & corporate taxes in Europe
Ireland vs Greece: Enda Kenny's false claims on growth, taxes and debt
Irish standard of living in 2014 below Euro Area average, Italian level; Prices 5th highest in EU28
Irish goods exports rose a record 30% in April - due to fake tax-related transactions
Mexican tall ship to sail into Dublin on June 17th
Irish industrial production up 20% in first four months of 2015; Construction down 2.6% in first quarter
Irish Economy 2015: ESRI slams return to boom-time pro-cyclical fiscal policy
Irish pension fund returns in average range 1.6% - 1.8% in May 2015
Irish service sector PMI remains strong; Tax avoidance clouds data
Ireland: Official unemployment rate at 9.8% in May; Broad rate at 19% — 440,000 people
Ireland: Fiscal Council warns of dodgy forecasts, no plan; OECD warns of new property bubble
Irish Public Finances: Tax revenue in first five months of 2015 €734m ahead of target
No simple measure of economic progress in Ireland: GDP & GNP defective
Irish manufacturing PMI rises in May; Production up unbelievable 45% in year to March!
ESRI says data volatility hinders Irish economic forecasting; Tax avoidance taboo cause
Ireland at 16 in international competitiveness ranking; US, Singapore and Hong Kong on top
Irish Economy 2015: Sectors to add 200,000 jobs?; Broad jobless rate at 19%
Irish Export Performance: Myths and reality - Ireland is a poor exporter
Irish Economy: 41,300 jobs added in 12 months to Q1 2015 - Construction up 19,600
China-Ireland: Economic relationship on a slow burn
Estonia, Austria, France, Ireland head global alcohol rankings
Irish Exchequer Returns: Tax receipts under target in April but ahead in year
Irish service sector PMI rose in April
Irish manufacturing PMI remained strong in April- includes overseas manufacturing
Irish Live Register + 90,000 activation scheme numbers at 439,000 in April
Ireland: Coalition drops 2018 full-employment target
Ireland Spring Statement: Noonan promises 200,000 net new jobs by 2018
Irish Economy 2015: Retail sales volume up 1.4% in month of March