Department of Finance: ‘Healthy’ tax revenues are on track

The exchequer continued to take in more in taxes than it anticipated just six months ago, providing some welcome fiscal headroom for any new incoming minority government.

Tax and spending returns for the first four months showed tax revenues surged by more than €1.1bn, up 9% from a year earlier, to reach more than €14bn.

The €14bn in tax revenues collected to the end of April was also €475m, or 3.5%, higher than the amount the exchequer had anticipated it would take in at this stage of the year.

The underlying figures were “healthy”, a Department of Finance spokesman said, but timing issues had led to “stronger than expected” outcomes for income and corporation receipts, which were unlikely to be repeated in the coming months.

In his budget last October, Finance Minister Michael Noonan had targeted for a 5.8% increase in revenues to €47.2bn for the whole of 2016.

The latest figures suggest the exchequer is well on the road to exceeding that fiscal target — as long as external shocks such as the UK voting to leave the EU do not arise.

Last week, in its Stability Programme Update (SPU) prepared for the European Commission, despite raising its GDP growth forecast to 4.9%, the Government stuck firmly to its fiscal forecast that it would raise €47.2bn in revenues in 2016.

That suggests the exchequer will hit its fiscal forecasts, said Conall Mac Coille, chief economist at Davy Stockbrokers.

The SPU also said that pressures were building on the Department of Health budget.

Yesterday’s figures showed the department had spent €78m more this year than expected, though all of the other 15 departments “were on or under profile”.

The end-April figures showed that, in a so-called non-Vat month, that Vat receipts, at a cumulative €4.16bn, were 3.8% below target, but officials said there was no reason for concern at this stage.

Vat figures will nonetheless be closely watched for May — the next big month for the collection of Vat receipts.

At €6.1bn, the exchequer collected almost exactly what it had anticipated from income taxes at this stage of the year.

Corporation taxes took in €759m over the first four months, while excise duties, at over €2bn, were almost 11% ahead of profile for the first four months.

Last year, corporation taxes had unexpectedly flooded into the Government’s coffers.

The department had previously signalled that it did not anticipate a repeat of last year’s bounty.