The Government collected more tax in the key month of November than it had been anticipating a couple of months ago, according to figures published by the Department of Finance this afternoon.
The Exchequer returns data show income tax receipts came in €50 million ahead of expectations last month alone, although for the year as a whole income tax receipts remain €575 million or 5 per cent behind targets set by the Government in April.
Total tax revenues slipped by a further €285 million last month - largely due to worse than expected VAT income - and are now almost €1.36 billion behind the April targets.
However, the overall picture for tax revenues has improved since the Department of Finance indicated in October that the tax shortfall would rise to at least €2 billion by the end of the year.
A spokesman for the Department of Finance said the shortfall was now likely to be “€1.8 billion at most” and described the extra €50 million from income tax during the month as “a pleasant surprise”.
November is a key month for income tax receipts, because it is when self-assessed taxpayers file online tax returns. It is also a key month for both VAT and corporation tax.
VAT fell a further €138 million behind the April targets and is now running 20.5 per cent behind the value of VAT received in the same period last year, as consumer spending remained under pressure.
Corporation tax is running 3.3 per cent ahead of expectations, according to the November data, but is still down 25 per cent on last year’s receipts.
Overall tax receipts are running almost 21 per cent behind last year’s performance, having deteriorated from a 17.1 per cent year-on-year decline recorded in October.
“The pressure is mounting on the Minister for Finance Brian Lenihan to deliver a very tough Budget next Wednesday and stick to the promises given to the European Commission as regards fiscal austerity measures,” said Alan McQuaid, economist at stockbroking firm Bloxham.
Chartered Accountants Ireland said the income tax figures showed that the worst fears of a meltdown from the self-employed sector had been avoided. While income tax receipts have held up better other categories of tax, they remain down 10 per cent on last year.
The accountancy body’s director of taxation Brian Keegan added that the weak VAT receipts strengthened the case for a stimulus to consumer activity in the form of a cut in VAT in next week’s Budget.
The Exchequer deficit now stands at more than €22 billion. This compares to a deficit of almost €7.9 billion this time last year.
The Government is due to publish its pre-budget White Paper on Friday, which is still expected to show a General Government Deficit (GGD) close to 12 per cent of Gross Domestic Product (GDP).
The Government said in September tax receipts for 2009 as a whole would be closer to €32 billion rather than the €34.4 billion it forecast in April.
Tax receipts for the first 11 months have now reached €30.75 billion.
On the spending side, only two Government departments are running ahead of their budgets: the Department of Health and Children, where spending is €244 million or 2.1 per cent ahead of projections, and the Department of Arts, Sport and Tourism, where spending is up 3 per cent or €14 million ahead of target.
A Department of Finance spokesman said it was unlikely the health budget would be brought under target by the end of the year.
Overall, net voted expenditure by the Government is €692 million or 1.6 per cent lower than the budgets set earlier this year. Most of this “underspend” relates to capital spending and is likely to be made up by the end of the year.
