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Irish Tax Revenues Up, But Some Targets Not Met

by Jason Gorringe,, London

07 November 2011

The Irish government had taken almost EUR2bn (USD2.74bn) more in taxes at the end of October than in the same period last year, with the new pension levy performing particularly well. However, many of the government's targets have not been achieved.

The end-October exchequer returns show that tax revenues, at EUR26.7bn, are almost EUR2bn (8%) higher than in the same period last year. This year-on-year increase is due in large part to income tax growth of almost 22%, attributed by the government to the measures introduced in Budget 2011, including the universal social charge, charged on all gross income above a certain threshold, at staggered rates.

Stamp duties recorded a 52% year-on-year increase due to receipts from the Jobs Initiative pension levy. The Initiative imposed a 0.6% tax on all assets under management of funded pension schemes and personal pension plans established in Ireland. The levy brought in EUR460m at end-October. Excise duties are marginally up also but both VAT and corporation tax receipts fell in the year to end-October, by 3% and 5.5% respectively.

In spite of a strong year-on-year performance, tax revenues are EUR184m (0.7%) below target at end-October. The government acknowledges this is worse than the position at end-September when taxes were EUR160m (0.7%) ahead of profile. Nonetheless, the monthly shortfall in October was largely anticipated as some income tax payments originally profiled for collection in October were received earlier than anticipated, in April and July.

Income tax is now EUR125m (1.2%) below target. However, the Department of Finance says that, given the very large year-on-year increase projected at Budget time, owing to the introduction of the USC and other significant revenue raising measures, this can be viewed as a good performance. Excise duties, the third biggest source of tax revenue, are slightly ahead of target, by EUR17m (0.5%) so far in 2011.

VAT continues to be an issue, experiencing a fifth consecutive monthly shortfall. It is now EUR383m (4.5%) below target on a cumulative basis, reflecting weak domestic demand conditions. Corporation tax is EUR109m (4.2%) below profile. November is the key month of the year for corporation tax receipts and its performance will have a significant bearing on the end-year outturn.

TAGS: tax | economics | pensions | value added tax (VAT) | Ireland | corporation tax | excise duty | stamp duty | social security | revenue statistics | individual income tax

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