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Irish Tax-Take Swells Ahead Of Budget

by Jason Gorringe, Tax-News.com, London

03 September 2014


Ireland's tax-take was up 8.7 percent at end-August, prompting Finance Minister Michael Noonan to hint that next month's Budget will see an easing off of austerity measures.

At EUR24.9bn (USD32.7bn), total tax revenue was up EUR2bn year-on-year. Cumulative tax revenues were 4.1 percent (EUR972m) ahead of target.

Noonan said: "In Budget 2015, we will target a reduction in [the] deficit to below 3 percent. It is clear from the strong Exchequer performance to date that the level of adjustment through tax and expenditure cuts required to achieve this will be significantly less than forecast at the start of the year. This is due to the economy generating extra tax receipts and ongoing control of expenditure."

Income tax recorded an increase of 9.1 percent (EUR880m) on the same period in 2013 and was up 1.7 percent on profile.

Value-added tax (VAT) continues to generate higher revenues than originally anticipated. At EUR7.4bn at end-August, VAT was up 3.7 percent on target and 8.5 percent year-on-year. The Finance Department says that these figures reflect improved consumer confidence and higher retail sales.

Corporation tax receipts for the year to date were up 5.4 percent (EUR121m) on 2013 and 8.5 percent (EUR186m) on target. A number of one-off non-recurring payments drove August's receipts well above target, by 82.2 percent (EUR117m).

Business lobby group Ibec welcomed the figures. Head of Policy and Chief Economist Fergal O'Brien commented: "They are the strongest indication yet that the era of higher rates and new taxes is behind us. There is now room to maneuver in Budget 2015, meaningful income tax cuts and increased investment would stimulate the economy and would help it grow by 4 percent next year. We expect the trend of revenue growth to continue into the final quarter of the year and this would mean that little or no net fiscal adjustment will be needed on Budget day."

A note of caution was nevertheless sounded by Tánaiste (Deputy Prime Minister) Joan Burton, who said: "We need to be careful not to raise expectations unrealistically in terms of the Budget, but to look to build on the economy's strengths, so that we can provide for sustainable prosperity and fairness. The landscape of this Budget is far easier than the three previous Budgets that this Government has had to address. If the trend continues, we will come significantly ahead of the target that is set for 2015."

TAGS: Finance | Budgets | tax | investment | value added tax (VAT) | Ireland | corporation tax | ministry of finance | tax authority | tax rates | revenue statistics | tax reform | retail | trade association | trade | individual income tax | Tax

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