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THE STATE HAS taken in €500 million more than it had hoped for in tax so far this year.
The figure for the first six months of the year currently stands at €221 million ahead of target, but is artificially low due to a slight delay in processing a €285 million payload from corporation tax returns.
The corporation returns will be included in the July exchequer figures, Department of Finance officials said today. The payments were slowed down by delays associated with the introduction of the Single European Payment Area regulations.
Department of Finance principal officer for budgetary policy John Palmer said that the returns were “a good sign for the economy”.
Full year
While the returns mark the end of what has been a broadly positive six months for the State’s finances, Finance officials won’t yet predict that the gains would be carried through to the end of the year.
A lot will depend, they said, on the returns filed during the period from Autumn to the end of the year, which includes the dates on which self-employed persons must file their income tax.
Overall, the budget deficit is just under €5 billion for the first half of the year, which is a €1.7 billion improvement on 2013.
The improvement in the property market has translated to a stamp duty haul that is €50 million ahead of target.
Around two thirds of this can be attributed to sales of commercial property, with the remainder raised from residential transactions.
Social Protection was again the largest spending department, accounting for 38% of all voted expenditure for this year.
A decrease in unemployment benefits as a result of the improving job market enabled Joan Burton’s department to come in ahead of target by 0.2%.
Health was in second place, with its €6.9 billion spend accounting for 27% of all expenditure.
However, the Department headed up by the beleaguered James Reilly still posted a €200 million overrun.
In a joint statement issued along with the figures, Ministers Michael Noonan and Brendan Howlin called the results “solid”.
The statement said: “The steps taken to stabilise the public finances over the last number of years have laid the foundation for the improvements in the domestic economy and, most importantly, the increase in jobs that we are no seeing.”
Both said that the Government remained committed to narrowing the budget deficit to under 3% by 2015.
Overspend
In a note issued in the aftermath of the release, Davy chief economist Conall MacCoille pointed to a “massive overspend” in the Department of Health which had in turn caused a €10 million overspend in net voted expenditure.
Despite this, he said that “spending arithmetic [is] still looking better than expected heading into next year’s budget”.
Mac Coille said that the improvement in the exchequer balance – which is around €1 billion to the good compared to expectations for the first half of the year – will be politically useful as the Government angles for a lesser than planned adjustment in Budget 2015.
“[This] will surely be seized upon as political cover to reduce this year’s Budget adjustment to around €1 billion, below the €2 billion originally planned.”
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