Tax take €1.2bn more than expected

THE public finances had another bumper month in October, according to official figures.

But critics said the latest Exchequer returns provided evidence that the Government was failing to meet its targets for spending on infrastructure.

Tax receipts for the 10 months to October stood at €29.4 billion, around €1.2bn ahead of the Government’s original target, while income tax receipts were €300 million ahead of target at €8.6bn.

The gap between income and expenditure grew, however, coming close to €1.3bn, up €100m on the same period last year.

Davy Stockbrokers head of research Robbie Kelleher said the latest figures showed the Government’s financial position was “even stronger” than he had originally thought and that there would be considerable scope in next month’s Budget for the Finance Minister, Brian Cowen, to be generous to taxpayers.

“Even though ten months of the year are gone, there is still a lot of tax collecting left in 2005.

“Almost 20% of annual revenues are collected in November - (it is) a big month for self-employed income tax, corporation tax and capital gains tax,” said Mr Kelleher. “If the current buoyancy is maintained into November, then the overshoot for the year could be considerably higher again.”

Mr Kelleher noted continued buoyancy across all tax categories, but said stamp duties and VAT were the star performers.

Stamp duties were 28% higher than last year and yielding €423m more than forecast, while the VAT take increased by 14% and was €427m ahead of target. However, there was bad news on the corporation tax front, which showed a continued slump in tax paid by businesses.

“The one major category that is behind target is corporation tax,” said Mr Kelleher.

“It is €209m behind target in the ten months, but that has improved from a shortfall of €281m.”

Mr Kelleher also predicted good news in the Budget and said Mr Cowen could give away as much as €2bn in tax and welfare breaks. Labour finance spokesperson Joan Burton was more downbeat, however.

Ms Burton said the latest figures showed the Government had underspent on capital projects by as much as €500m.

She added that it was “ludicrous” to suggest the Government was capable of ramping up spending to cope with the proposed €35bn infrastructure investment programme announced earlier this week. All the big strategy documents and all the slick presentations won’t hide the facts,” said Ms Burton. “This Government is incapable of delivering capital projects on time and within budget.”

Ms Burton also said corporation tax returns were weak and that the finance minister needed to deliver “a convincing explanation” for the negative trend in this particular area.