Tax revenue ahead of expectations

Tax revenues came in marginally ahead of expectations while spending was lower than forecast, leaving a deficit of €7.1bn, according to exchequer returns to the end of September.

Tax revenues for the month were up €768m compared with Sept 2012 and total tax revenues for the first nine months of the year reached €26.886m. This is €4m ahead of expectations.

Peter Vale, a partner at consultancy firm Grant Thornton, said: “The last set of data available to the minister in advance of the budget is consistent with what we have seen in the year to date and shows that tax receipts are broadly on target and well ahead of the same period last year.

“One feature of the year thus far has been weak Vat receipts reflecting dampened consumer spending. Interestingly, the September Vat receipts were strong, perhaps indicating a shift in consumer sentiment and reflecting some recent positive data regarding consumer confidence.

“Should this trend continue, it potentially offers the minister some room for manoeuvre in terms of tax raising measures to be introduced in the budget.

“Another feature of the September figures was the higher-than-expected stamp duty receipts,” he said.

Non-tax revenue for the nine months came in at €2.278m, which was €132m lower than the same period in 2012, mainly due to the removal of the eligible liabilities guarantee earlier this year. Capital receipts came in at €3.824 at the end of September, a €2.4bn increase on 2012 on the back of the sale of Irish Life and divestment of ‘CoCo’ notes in Bank of Ireland.

Net voted expenditure to the end of September was €31.6bn, which was €879m or 2.7% below profile. For the first nine months of 2012 expenditure ran €338m ahead of profile.

Mr Vale said: “In terms of Budget 2014, it is worth noting that many of the tax-raising measures for 2014 were introduced last year, such as the full year’s property tax and proposed changes to the tax deductibility of pension contributions.

“I expect we will see some further tax-raising measures introduced in Budget 2014 such as an increase in PRSI for the self-employed and increases in duties on the ‘old reliables’.”