There were few surprises in the latest exchequer returns as tax receipts and expenditure came in broadly in line with expectations.
Tax revenues came in at €14.8bn for the five months to the end of May, which was a €366m or 2.5% increase on the same period in 2012 and €105m ahead of expectations. However, most of the increase in tax receipts has been attributed to timing issues because they include property tax returns of €121m for the first five months. Excluding property tax, total returns are in line with expectations.
Income tax to the end of May came in at €6,122m compared with €5,997m last year, which is a 2.5% increase. However, income tax is €55m below target for the year.
Corporation tax was €1,041m for the year to date compared with €1,102m last year. Overall corporation tax is €150m ahead of profile for the year. Excise duties were €1.8bn for the five months which is 1.5% below expectations but a 2.9% increase compared with last year. Vat was €12m below its target of €1,530m for the period.
Net voted expenditure was €17.68bn, which was €385m below profile and €1.127bn below the same period last year. Social protection, health, education and justice are among 13 of the 16 vote groups showing a reduction in expenditure.
Current expenditure was €16,929m which represented a €961m decrease on last year and €277m below target. Capital expenditure was €751m compared with €917m last year.
Bringing it all together, the figures show that the public finances remain on-track to at least meet full-year targets.
After adjusting for timing issues around the property tax, tax revenues are more or less in line with expectations, while the discipline on the expenditure side (in particular in terms of current spending) provides further comfort.
“For 2013 as a whole, we currently expect the general government deficit as a percentage of GDP to narrow to 7.4% from last year’s 7.6%, in line with Department of Finance estimates,” said NCB chief economist Philip O’Sullivan.
Chief economist with Merrion Stockbrokers Alan McQuaid is taking a more optimistic view. “The Stability Programme Update has factored in a general government deficit of 7.4% of GDP for 2013, down marginally from 7.6% of GDP in 2012. However, we believe the out-turn come year-end will be closer to 7.0%, with the exchequer deficit likely to be around €11bn.”