Public finances on track for 4.8% deficit

The Government remains on track to meet the 4.8% fiscal deficit target agreed with the troika by the end of this year.

The latest Exchequer figures for the end of March show the deficit was €2.3bn, which is a €1.4bn improvement on last year. Tax revenue was up 4.7% compared with the same period in 2013 whereas net voted expenditure was down 6.1%.

“The Exchequer returns for the first quarter of 2014 represent a solid start to the year. In line with the improvement in the domestic economy, the reduction in the live register and the increase in employment levels, tax revenues are growing and expenditure on public services is within budget,” said Finance Minister Michael Noonan in a statement.

“Ensuring debt sustainability is a key pillar of the medium term economic strategy and this Government is committed to reducing the deficit to under 3% by 2015. Significant progress has been made in restoring order to the public finances and these figures highlight that this remains a key priority into 2014,” he added.

Tax receipts were up across most of the main categories. Income tax increased year-on-year by 3.5% to €3,795m at the end of March. A total of 61,000 jobs were added to the workforce over the course of 2013. Vat receipts reached €3,509m, a 6.4% increase on 2013. Corporation tax receipts were €256m for the period, which was 35.1% down on last year. However, 2013 was boosted by a one-off lump sum. Excluding that, corporation tax is 17.5% above profile.

This is the first year of the local property tax. A total of €214m had been collected to the end of March, which is 1.1% ahead of profile. Excise duties were 11.5% ahead of last year at €1.1bn.

Net voted expenditure was €10,264m at the end of March, which is 5.8% down on 2013. Moreover, 14 of the 16 spending departments were below profile.

The Taoiseach, Enda Kenny and Mr Noonan have pledged to introduce income tax cuts in October’s budget. According to sources, this has caused concern at the European Commission. The Government is committed to meeting a 3% budget deficit target by the end of next year.

“While these figures show a positive start to 2014, we must be cautious,” said chief executive of Chambers Ireland, Ian Talbot.

“Now is not yet the time to consider reducing taxes. Instead we should continue to support job creation, foster the domestic economy and continue to reduce the cost of Government to strengthen our economic recovery,” he said.