However, despite February officially being a non-due month, Vat receipts were strong with €503m being collected. That performance was aided by lower-than-expected repayments. Vat revenue is now almost 17% up, on an annualised basis, in the year to-date and is over 8% ahead of target.
Despite improving employment levels, last month saw just over €1.48bn received via income tax payments — 6% under target. For the first two months of the year, income tax receipts are down 0.4%, year-on-year.
Corporation tax receipts of €208m were also 6% — or €13m — shy of targets for the month, but are nearly 10% up, on an annualised basis, so far this year. Excise duties brought in €345m in February, more than 15% below target, but €28m came in via the local property tax, 25% ahead of expectation.
“With employment figures showing strong growth, it is surprising we are not seeing a resultant increase in income tax receipts, notwithstanding the lower income taxes that kicked in at the start of the year,” said Peter Vale, tax partner at Grant Thornton.
“The minister will hope ongoing strong Vat receipts, combined with expected healthy corporation tax collections, prop up any underperformance elsewhere as the year progresses. However, longer term, both Vat and corporation tax receipts remain susceptible to development elsewhere, including Brexit and potential US tax reform.”
In total, the Government has collected €7.5bn in tax across January and February, with an exchequer surplus of €587m being recorded for the year to-date. That is up from a surplus of €310m for the same period last year. The increase prompted Chambers Ireland to call on the Government to increase spending in this year’s capital plan review.
“The continued increase in the tax take provides an opportunity to plan for increased investment in the infrastructure urgently needed to maintain Ireland’s competitiveness and to facilitate future economic growth,” said Chambers Ireland boss Ian Talbot.
Davy Stockbrokers’ chief economist Conall Mac Coille said February’s Exchequer figures paint “an encouraging picture” and the Government’s target of a budget deficit of €1.2bn — or 0.5% of GDP — can still be bettered this year. Davy expects a deficit of 0.3% of GDP, to be helped further by AIB’s plan to pay a €250m dividend.