Tax revenues for the first two months of 2011 are running more than €100 million ahead of last year, new data from the Department of Finance shows.
However, the Exchequer returns published this afternoon also reveal that worse than expected VAT receipts have contributed to a €128 million shortfall in the tax receipts that the department had expected for January and February.
The Exchequer deficit at the end of February stood at €1.9 billion. This compares to a deficit of €2.4 billion at the same point last year.
The total tax revenues received are €104 million higher than they were last year, while the deficit has also improved because Government spending is running €171 million lower and because changes have been made to the way in which interest is paid on national debt.
The Government has collected €4.8 billion in tax revenues so far this year. This is some 2.2 per cent higher than the performance of tax revenues in 2010. As a result of the boost from income tax measures in Budget 2011, which includes the reclassification of health levy receipts as income tax, revenues from this category of tax are now up 7.2 per cent year-on-year.
However, income tax receipts have slipped €45 million behind targets set by the Department of Finance a month ago.
February is not an important month for VAT receipts, which are due in January and every second month from there on. However, the sum received by the Exchequer in February still fell short of expectations, putting the combined receipts for January and February below the sum received during the same period in 2010.
Overall tax receipts are running 2.6 per cent behind the department's targets.
The cost to the Exchequer of servicing debt in the first two months of the year arrived at €104 million, down €259 million year-on-year. However, most 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 full cost of debt servicing, including the CSRA, was €626 million. This is some €264 million higher than the cost in the first two months of 2010, reflecting the higher cost of servicing Ireland's bigger debt burden.
Total net voted expenditure by the Government at the end of February stood at just over €7 billion, down 2.4 per cent year-on-year. Capital spending, or spending on infrastructure, is down 52.4 per cent, while net current or day-to-day spending is up 3.4 per cent.
Net current spending is showing an increase because health levy receipts have been reclassified as income tax as a result of the new Universal Social Charge (USC).
