THE GOVERNMENT’S TOTAL tax take for the 2011 calendar year was 2.5 per cent lower than had been expected in last year’s Budget, new data has shown.
Exchequer returns for the month of December were published this afternoon – giving a complete picture of how the government’s income fluctuated over the course of the year.
The figures show that income tax, VAT and corporation tax – three of the largest areas of government income – all fell significantly behind their targets laid out in Brian Lenihan’s final Budget in December 2010.
Revenue from income tax was €327 million (2.3 per cent) lower than hoped, at just under €13.8 billion, while VAT income was down by almost five per cent – though this can be accounted for by the introduction of a lower 9 per cent rate as part of the ‘jobs initiative’ in July.
Excise duties, the third-largest source of tax income, was just €3 million over its target of €4.625 billion – while corporation tax, which had been expected to contribute over €4 billion of income, supplied only just over €3.5 billion.
Nonetheless, the overall income – of just over €34 billion – was up by over €2.4 billion on 2010, with expenditure up by a little over €1 billion, contributing to a reduction in the current spending deficit of €1.3 billion.
The overall exchequer deficit, however, remained almost €25 billion, up by over a third on 2010 – largely due to the shares acquired in Irish Life & Permanent, €3.1 billion of promissory notes, and €5.27 billion of banking recapitalisation.
Ministers Michael Noonan and Brendan Howlin nonetheless welcomed the figures, saying Ireland entered 2012 “with our finances under control, and this further underpins the credibility of our 2012 budgetary forecasts”.
“The Exchequer deficit in 2011 was some €2.75 billion lower than it was 2010, when the impact of banking related expenditure is excluded,” they said.
Noonan added that while tax revenues were weaker than expected in the second half of the year, “nonetheless there were some positive aspects to the tax revenue performance in 2011 and I am confident that the 2012 tax forecasts will be delivered.”
Peter Vale, a partner at Grant Thornton, said it was worth noting that while income tax rates and bands had been continually raised in the last few years, they seemed to make little impact on overall income tax receipts.
“This may be the case with future VAT revenues as lower spending is offset by the higher VAT rate, resulting in a static tax take from VAT,” he said.
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