RISKS TO ECONOMIC GROWTH NOW ON THE DOWNSIDE - Tax receipts for the month of December were surprisingly good, according to the latest set of Exchequer Returns. December returns came in €440m higher than Department of Finance targets. The corporation tax take for the month was double the expected amount, while VAT and excise duties also came in ahead of target. That means the overall tax take for the year was 0.7% higher than had been pencilled in by the Department. The Exchequer deficit for 2012 came in at €14.9 billion, €10 billion lower than the 2011 figure. That means the general Government deficit - which is the one the EU, the Troika and outside investors focus on - was 8%, well below the 8.6% Troika target in the bailout programme.
Merrion economist Alan McQuaid says he hopes yesterday's encouraging Exchequer figures will continue into 2013. He also points out that they did not include the strong retail sales seen in the run-up to Christmas and he also points to strong PMI data for December. He says that broadly the economy is improving and is doing better than had been anticipated with risks to growth now on the downside. Yesterday's figures showed that corporation tax returns were much higher than expected, mainly on the back of strong figures from two multinationals operating here. But Mr McQuaid says that the Government can not continue to rely on the fortunes of foreign firms and must try to get the domestic economy strong again.
Income tax receipts missed their targets last month and the economist says the unemployment rate at 14.6% remains much too high to stimulate growth. He also says that imposing more taxes on the ever decreasing number of people in employment will not work. He stresses that it is not a good idea to raise taxes in the current climate and points out that retail sales rose last month due to consumers' relief that there was no increase in the personal tax rates in the December Budget.
MORNING BRIEFS - Competition authorities in the US have ended a 19 month probe into how Google operates its internet search business and how it uses patents it owns on smartphone technology. The FTC dropped an investigation into claims that Google manipulates search results to promote its own products including Google Maps. But the company has agreed to stop misusing the smartphone patents to try to hinder and impose unnecessary costs on competitors trying to develop software for tablets and smartphones.
*** The 280 year-old Swiss bank Wegelin has pleaded guilty to helping US citizens evade tax. It will pay a $58m settlement. More significantly the bank, whose business pre-dates the American Revolution, will now shut its doors. Wegelin admitted to charges of conspiracy in helping Americans evade taxes on at least $1.2 billion for nearly a decade. Otto Bruderer, a managing partner at the bank, said in court that "Wegelin was aware that this conduct was wrong."