Finance ‘confident’ of targets despite fall in Vat

The Government collected less than it anticipated in Vat and in corporate tax receipts last month but finance officials said revenues were still on course to meet the budget targets by the end of the year.

The figures which were released in the exchequer returns for the first seven months of the year come three months before Finance Minister Paschal Donohoe presents his first budget.

Despite July being a Vat payment month, the Government collected almost €1.89bn in Vat receipts in the month, missing the monthly target by a considerable €129m. That was due to a number of sizeable repayments of the tax that were made in the month.

Total Vat receipts of over €8.79bn, however, were €74m above target over the full seven months of the year.

A sharp drop in new car sales this year had not affected revenues and had been offset by a sharp rise in sales of second-hand cars, officials had said in the past.

Retail sales figures published last week for June, show that when vehicle sales are excluded, there was no change in the value of retail sales in the month, but that they were up 3.5% from a year earlier.

“All the main tax heads are right on target, if you strip out the Vat repayments. And we are confident of meeting our budget targets by the end of the year,” a Finance Department spokesman said.

Income tax — the biggest of the ‘big four’ tax sources — brought in over €1.67bn in July, just slightly above target.

But at €10.72bn, income tax revenues for the full seven months were below target, by €208m.

Earlier this year, officials had investigated a shortfall in income tax revenues when mysteriously USC revenues fell short in the early months of the year, despite the PAYE element rising sharply in line with increased employment.

That anomaly has now disappeared and USC and PAYE were again performing in tandem, officials said.

At almost €4.4bn, the exchequer’s overall tax revenues in July were €119m blow target for the month, and at over €27.81bn, were €230m below target over the full seven months of the year.

The Department of Finance said the increase in tax revenues of 4.5% from a year earlier was a “solid” performance.

At over €539m, excise duties exceeded the monthly target by €40m. And, at over €3.32bn, excise duties brought in €43m less than anticipated over the full seven months.

Officials in the past had said the delayed introduction of plain packaging for cigarettes had contributed to volatility in the excise revenues.

The exchequer collected €34m less from corporation tax receipts in July than was anticipated, but with a large chunk of overall corporation tax revenues collected in the last few weeks of the year, the monthly figure will not ring any alarm bells.

At almost €3.61bn, corporate revenues were slightly below target for the full seven months, but up 9.4% in the year.

Nonetheless, the corporate tax receipts are not showing the super-charged performances of recent years.

The Government had enjoyed huge windfalls after multinationals re-arranged their global tax affairs when the world’s largest companies came under international scrutiny for their aggressive tax planning.


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