Today’s exchequer figures from the Department of Finance show a modest improvement in tax revenue in June. The Department of Finance added that government spending has moderated and it is confident of an Exchequer surplus by year end.
In its Exchequer figures published today, the Department predicted that an emerging shortfall in tax revenue of the order of €500 million may arise by the end of the year. It also noted there is also a potential additional cost of meeting benchmarking in 2002.
However, extra non-tax revenue from Central Bank profits, lower EU Budget contributions, ACC receipts and miscellaneous other receipts, including UMTS licence fees, should provide an offset, it said.
The figures show a surplus of €507 million for the six months to the end of June. This compares to a surplus of €3,311 million for the same period in 2001 and a surplus of €170 million budgeted for 2002 as a whole.
The Minister for Finance, Mr McCreevy, said the figures were in line with achieving a surplus by the end of the year.
"Although tax revenue was below expectations, extra non-tax and other revenues should help compensate for this shortfall," he said.
Income tax revenue for June, while 13.4 per cent down on the same time last year represents an improvement on May when income tax revenue was 14.7 per cent behind target.
Department officials offered an explanation for the alarming fall in the income tax take seen this year. They said the combined effects of redating the tax year to January which meant tax changes took effect earlier and the carryover from Budget 2000 had a once-off effect on the revenue figures.
Mr Donal McNally of the Department of Finance said that while tax revenue had made progress in June it remained open to question if tax receipts will make up the lost ground. Expected tax revenue in the second half of 2002 is expected to be weak but an improvement on the first half of the year, he said.
The rate of current spending also seems to have been reined in as the figure of 21.1 per cent at the end of June is down on the 27 per cent reported in May.
Mr Michael Scanlan of the Department of Finance said that he had expected spending in the first half of the year to be higher than the second half and that current spending was "pretty much on target."
Mr Scanlan said that each government department’s monthly spending is being monitored closely by the Department of Finance and it was the responsibility of each department to manage its expenditure within the 14.5 per cent spending limits.