Tax take up 3.5% on forecast

The national coffers continue to improve as the tax take for the 10 months to the end of October came in well ahead of the same period last year and also 3.5% above forecast. 

Total tax revenue for the nine months reached €31,976m, which is €2,734m, or 9.4%, above the corresponding period in 2013 and €1,092m, or 3.5%, ahead of target.

There was an improvement across most of the major tax headings. Income tax was €13,129m, which is an 8.2% increase on last year and 0.4% ahead of profile. The better-than-expected performance of this key category stems from increased employment levels. Vat receipts also came in ahead of expectations at €9,325m, which was 8.2% above 2013 levels and 0.4% ahead of profile. The bounce in Vat receipts reflects the higher levels of consumer spending as domestic demand is now growing for the first time since 2008.

“All in all, these figures will doubtless bring a smile to the faces of the occupants of the Department of Finance,” said Investec chief economist, Philip O’Sullivan. “Coming three weeks to the day that Budget 2015 —which confirmed that the Government’s austerity drive has come to an end— was delivered, the figures show ongoing strong momentum behind tax revenues and broadly contained [notwithstanding specific concerns about the overruns in health] expenditure.”

Corporate tax receipts also performed robustly for the 10 months, coming in at €2,954m, which was 6.8% above year-ago levels and 8.2% above profile.

“The immediate reaction to the changes introduced last month to our corporate tax residence rules, in particular the abolition of the double Irish structure, has been positive,” said Peter Vale, a tax partner at Grant Thornton. “Rather than any flight of capital, the overall package of changes has been broadly welcomed by overseas investors and the enhanced reputational benefits have arguably further enhanced our attractiveness.”

Excise duties at €4,056m are up 5.3% on the year. Stamp duties reached €1,502m, which is a 29.2% increase on the year — reflecting a more buoyant housing market. However, the local property tax at €409m was 5.2% below profile.

Net voted expenditure was €34,803m for the 10 months, which is €507m below last year. Spending was down across all departments except health, which was 3.3% above profile.

The budget deficit is likely to come in below 3.7% of GDP for 2014.