Budget 2015 adjustment will be 'significantly less' than previously planned: Noonan

Tuesday 02 September 2014 17.43
Michael Noonan said the adjustment in Budget 2015 would be smaller than previously expected, but warned against any giveaway
Michael Noonan said the adjustment in Budget 2015 would be smaller than previously expected, but warned against any giveaway

The Minister for Finance has said that this year’s Budget adjustment will be significantly less than the €2.1bn forecast at the start of the year.

Michael Noonan was speaking after publication of Exchequer returns for August, which show the tax take was €971m (4.1%) ahead of the targets set out at the end of 2013.

Just short of €25bn in taxes was received by the State during the eight month period, compared to an expected take of below €24bn.

In a statement Mr Noonan said the figures – and in particular the performance of income and consumption taxes – were “further evidence that the recovery is strengthening as the year progresses".

He said the Government would aim to reduce the country’s deficit below 3% of gross domestic product in Budget 2015, however the latest figures showed 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 growing economy generating extra tax receipts and ongoing control of expenditure,” he said.

Almost €10.6bn has been received in income tax in the year to date, according to the Exchequer figures, €172m (1.7%) more than forecast and €880m (9.1%) more than had been received in the same period of 2013.

Close to €7.4bn has been received through Value Added Tax, €261m (3.7%) more than anticipated and €577m (8.5%) ahead of the 2013 figure.

Around €2.4bn has been received in corporation tax, according to the figures, while nearly €3.17bn has come in under the excise duty category.

The amount earned from stamp duty - €646m – is significantly higher than forecast, albeit from a low base.

Capital gains tax and capital acquisitions tax were both €2m behind profile, with €124m and €91m collected in each area respectively.

Meanwhile, the €363m has been received via the local property tax so far this year, €6m less than had been anticipated.

But despite the better-than-expected figures, Mr Noonan warned against the idea of a giveaway budget, saying the State continues to borrow an average of €800m a month.  

This has resulted in a budget deficit of €6.3bn for the first eight months of the year.  

Although this is €1.3bn better than targeted at the start of the year, Mr Noonan said it was still too high and had to be further reduced.

Noonan to discuss IMF loan repayment with EU figures

Michael Noonan will hold a number of meetings next week relating to Government plans to pay back Ireland’s International Monetary Fund loans ahead of schedule.

In July the Government announced its intention to refinance the IMF loans in order to reduce the cost of servicing the debt.

However under the terms of the country’s bailout, Ireland must make an equivalent payment on its loans from European institutions as part of any early repayment of its IMF borrowings.

The Department of Finance said Mr Noonan would hold a number of meetings next week on the issue with EU Commissioner for Economic and Monetary Affairs Jyrki Katainen, European Central Bank president Mario Draghi, Eurogroup president Jeroen Dijsselbloem and European Stability Mechanism CEO Klaus Regling.

The minister would seek the support of Europe’s various institutions for the early repayment of the IMF loans at these meetings, according to the department.