Company tax blamed for slight shortfall

Thursday 02 June 2011 19.05
Tax receipts - €70m behind target
Tax receipts - €70m behind target

Figures from the Department of Finance show that total tax receipts in the first five months of this year were marginally behind expectations.

The figures also show that the gap between Government borrowing and spending in the period was €10.2 billion, up from €7.9 billion in the same period last year.

Total tax receipts of €12.8 billion were just €70m, or 0.5%, behind targets set out earlier this year.

The Department of Finance said the May figures were affected by lower than expected corporation tax receipts, which it partly blamed on timing issues. Almost €600m in corporation tax was taken in the first five months of this year, €70m or more than 10% behind expectations.

Of the other big four tax categories, income tax was in line with targets at €5 billion, but VAT was almost 2% below target at €4.9 billion. Excise duties, however, were almost 3% better than expected at €1.8 billion.

Income tax receipts have been boosted by the inclusion of the universal social charge, meaning they are also 20% ahead of the same period last year.

Total spending was €18.4 billion, €367m or 2% below target. Current spending is slightly below projections, but capital spending is 9.8% short. The department blames the capital shortfall on timing issues.

The total cost of servicing the country's debt in the first five months was just over €1.9 billion.

The Exchequer deficit was swollen by €3 billion paid to Anglo Irish and Irish Nationwide, the first portion of the money committed to the two institutions last year.

Bloxham economist Alan McQuaid said the figures were 'somewhat disappointing by no means a disaster', following the improvement in the tax take in April. But Davy's Conall Mac Coille said the figures`indicated that tax revenues continued to perform well in May. 'Today's release provides more support for the view that tax revenues will meet the targets set out in Budget 2011,' he said.