Property Tax Revenues Help Bring Irish Exchequer Into Surplus

by Jason Gorringe, Tax-News.com, London

05 January 2007

A strong increase in tax revenues, particularly from the booming property sector, helped the Irish Exchequer record a surplus of more than EUR2.25 billion in 2006. The figure compares to a deficit of EUR499 million in 2005.

Commenting on the results, Minister of Finance Brian Cowen stated:

“These results confirm the prudent and far-sighted approach being taken by the Government to planning the nation’s finances."

"The nation’s debt now represents less than 25% of our income compared to nearly 120% twenty years ago. The extra resources generated by unparalleled economic growth since 1997 have gone to improve public services and infrastructure all round, reduce the tax burden on all persons and, in particular, on the lower paid and provide for future pensions through lower debt and increased contributions to the National Pensions Reserve Fund set up by this Government.”

Total current receipts in 2006 amounted to EUR46.145 billion, compared to receipts of EUR39.849 billion for 2005, an increase of 15.8%.

Tax revenue, at EUR45.539 billion was EUR3.889 billion ahead of government projections at year-end. Year on year tax receipts were up 16.0% compared to a targeted increase of 6.1%. Receipts from all taxes were above targets.

The best performers were Capital Gains Tax (up EUR1.065 billion) and Stamp Duty (up EUR1.032 billion); the combined receipts from these taxes account for 54% of total tax receipts. Receipts from the major taxes such as Corporation Tax (up EUR653 million), Income Tax (up EUR580 million) and VAT (up EUR353 million) accounted for 41% of total excess tax receipts.

Non-tax revenue in 2006 was EUR606 million. This compares to EUR595 million in 2006 and was in line with expectations.

Capital receipts for 2006 amounted to EUR1.871 billion compared with EUR995 million for 2005. The year-on-year variation is accounted for by an increase in Feoga and Cohesion Fund receipts, together with receipts from the sale of state property and the sale of Aer Lingus.

Cowen said that the government's new fiscal position will allow it to spend EUR56 billion on services in 2007

The figures are a welcome boost ahead of the publication of its National Development Plan 2007-2013 later this month, an initiative Cowen described as "an ambitious programme that will provide a framework for investment in our physical and social infrastructure and will be critical to the achievement of the identified economic and social goals”.

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