No rabbits to be pulled from 'budget hat' despite gains
No rabbits will be pulled next week from the “budget hat” despite the latest exchequer figures suggesting corporation tax revenues were again picking up steam, analysts said,
New Department of Finance figures showed that overall tax revenues in September were on target but still undershot expectations by €212m for the full nine months of the year.
The shortfall would have been greater but for corporation tax revenues. A star performer over recent years as multinationals scrambled to rearrange their global tax affairs, company tax revenues appear set to break records again.
In the month, corporate taxes brought in €742m, which was €103m, or over 16% above the September target.
At €4.67bn, they have also exceeded targets over the full nine months — taking in €169m more than anticipated so far this year.
Conall Mac Coille, chief economist at Davy, said corporation taxes were set to have a strong year but there were likely to be few “rabbits out of the budget hat”.
Peter Vale, tax partner at Grant Thornton, predicted that “very modest tax cuts will be the order of the day” on Tuesday.
Income tax, the largest of the big four tax sources, was €33m above target in September. At just over €13.6bn, income taxes still brought in €188m less than forecast over the first nine months.
Finance officials said after a volatile start this year, the components of income tax revenues, such as PAYE and USC, were getting back on target.
In a Vat due month, Vat revenues contributed over €1.99bn to the coffers, but were €132m below target.
And, at over €11bn for the first nine months, Vat revenues were also below the target set by the department, although by only €36m.
Citing an 8% increase year-on-year increase, officials said there was no evidence of cross-border shopping affecting sales tax revenues. Business groups had warned the plunge in the value of sterling since last year’s Brexit vote would encourage shoppers to buy in the North.
Another of the rich sources of tax revenues, excise duties, continued to disappoint, however. The duties underperformed slightly by €8m in September, and were 2.7%, or €116m, below target over the full nine months. Forward payments due to the introduction of plain tobacco packaging were likely to blame, officials said.
On the other side of the coin, spending by Government appeared to be under control. Voted spending of almost €33.1bn over the first nine months was €270m below target. Nonethelesss, spending had increased by over €1.62bn, or by 5.2%, from a year earlier.
