Donohoe claims exchequer on course to meet fiscal targets

The Finance Minister has said the exchequer is on course to meet the Government's fiscal targets for this year.

Paschal Donohoe was commenting on new tax and spending figures for the three months to the end of September.

The data shows an exchequer surplus of €2.3bn.

This comes as a year-on-year improvement of €2.4bn - but it is underpinned by the sale of some of the state's AIB shares.

A tax expert said the development means Minisiter Donohoe has more than €200m less than planned to spend on next week's Budget, a marked change from last year when then Finance Minister Noonan had almost €500m more than forecast.

Peter Vale from Grant Thornton added that 'very modest' tax cuts will be the order of Budget day next Tuesday.

"Middle income earners [will be] the biggest beneficiaries if the mooted increase in the threshold for entering the higher income tax band is introduced," he said.

He said September's figures are encouraging as corporation tax recovers from a slow start earlier in the year.

"Corporation tax receipts are now 12% ahead of the prior year. Corporation tax has been the stand out tax in terms of increased revenues in recent years, jumping 50% in 2015 alone," Mr Vale said.

September was a relatively strong month for income tax receipts, with figures 5% ahead of the same period last year.

Despite a weak September for VAT, overall VAT receipts remain broadly on target and are well ahead of last year.

"While still unclear, it is looking less likely that there will be any movement in either the hospitality rate (upwards) or the VAT rate on construction services (downwards)," he said.

"Overall, it doesn’t look like the Minister has much room for manoeuvre next week, with less in the kitty than expected,” Mr Vale added.

Labour Finance spokesperson Joan Burton has said that the Government will have room in the Budget to deliver on better public services and capital investment.

"Should the Government commit to a tax reform agenda next week from those areas of the economy that contribute the least we have the potential to deliver the investments Ireland needs," Deputy Burton said.

"Tackling offshore tax evasion and closing loopholes in our tax laws are crucial to doing this," she said.

"It would be foolish to squander resources on unnecessary tax cuts at a time when vital needs must be competently addressed. Taoiseach Varadkar and Minister Donohue should not be tempted to play Santa for electoral popularity.

"People want housing, health and infrastructure properly provided. The Government should not be tempted to bypass these issues for short term electoral gains," she added.

Most Read in Ireland