Tax take beats expectations but deficit grows

TAX income moved ahead of expectations last month, Exchequer figures have revealed.

Some €18.6 billion was taken in levies in the first seven months of the year, up 8.4% on the corresponding period last year.

Income tax showed growth, ending up 25% higher than in 2010 to stand at €7.3bn.

However, this increase was mainly due to the introduction of the universal social charge in January. VAT receipts fell below expectation by €190 million at €6.4bn as the cut in some rates of the tax introduced last month will not be factored in until the September figures are released.

Corporation tax revenues climbed to €1.7bn, and excise duties were also ahead of expectations, with €2.6bn collected.

The pension fund levy brought in to finance the jobs initiative pushed stamp duties up by more than a quarter to €415.4m.

The €10.7bn pumped into ailing banks saw the deficit expand from €10.2bn this time last year to €18.9bn now.

But if the money poured into banks is taken out, the deficit is down by €2bn on 2010.

Financial expert Bernard Doherty, of accountants Grant Thornton, said the figures demonstrated that the country was on target to meet its bailout obligations.

“The Exchequer figures show an increase in income tax receipts of 25% on last year’s figures,” he said.

“This increase in tax figures in backdrop of decreasing employment means the burden on those in the workforce is getting heavier and heavier.

“The fact that income tax take increased for the first six months of 2011, despite unemployment rates at 14.2%, shows that the increased charges brought in last year’s budget are making themselves felt in people’s payslips. On a positive note, the consistency of the Exchequer returns to date show the Government is broadly on target with EU/IMF targets.

“Continuing to do all that we can to improve the attitude of the international financial community is of vital importance to Ireland’s recovery.”