Tax returns for the first half of the year were behind target, amid concerns health spending could exceed its budget by the end of the year.
Exchequer returns released yesterday covering the period of January to June, show income tax receipts were 2.3%, or €214m, below what was forecast at the start of the year.
Total income tax for the first six months of the year was €9.04bn, compared with a target of €9.26bn. There was some improvement in June in terms of income tax receipts, coming in 0.8% below expectations.
The figures will likely mean the firepower Finance Minister Paschal Donohoe will have in his first budget will be much less than that applied by Michael Noonan in the previous two years, said KBC Bank chief economist Austin Hughes.
Concerns earlier this year about lower than expected income tax revenues were caused by the department overestimating USC revenues. The model used by officials estimated the impact of wage growth on the tax.
Officials said that as the USC was still a relatively new tax, it has made it tricky to predict, particularly as rates have changed several times in recent budgets. They said USC will now come in around €80m behind target for the year.
Overall, the Government’s tax take for the six months to June was €23.4bn, 0.5% or €110m below the department’s projected target.
On the expenditure side, the figures show spending on health and social protection were €7bn and €5.4bn respectively, but both were inside the Government’s target for the year. However, officials could not guarantee health spending would remain within profile come the end of the year.
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