Tax revenues up 8.4% yoy and 1.5% (€385m) ahead of expectations

The Department of Finance (DoF) has just released the latest Exchequer Returns data, covering the Irish government’s fiscal performance to the end of September.

Tax revenues came in at €26.1bn, up 8.4% yoy and 1.5% (€385m) ahead of expectations. While the outperformance is welcome, we note that the magnitude of the revenue ‘beat’ has slowed from the 3.1% achieved in the first half of the year. The main areas of outperformance on the taxation side were corporation tax (€251m ahead of expectations, due in part to timing issues) and income tax (€101m ahead of expectations). Last month the State’s coffers were swelled by the receipt of the annual pension and health levies, which pushed stamp duty receipts to €846m versus €66m in the previous month.

On the spending side, while 12 of the 16 main voted expenditure headings were within budget, total voted spending was €338m (1.0%) more than forecast, with social protection (€434m over budget) and health (€255m over budget) the main culprits. However, the underlying expenditure position, after adjusting for the €245m shortfall in PRSI receipts), was €93m above expectations. In all, with the positive year-to-date surprise on the reported tax revenue side largely offset by the negative year-to-date overshoot on the headline voted expenditure side, Ireland’s public finances remain poised to meet their full-year targets. However, any indiscipline on the spending front will need to be addressed by the government if it is to meet its target for the expenditure component (€2.25bn) of the planned €3.5bn in fiscal consolidation measures planned for Budget 2013.

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