Income tax and VAT fall below target in March
Income tax and VAT collections dropped below target in March but another surge in corporate tax payments helped bring the overall monthly return ahead of target. New figures also point to health overspending in March.
Exchequer data for March presents a mixed picture, as the overall tax return in the first three months of the year was ahead of target and ahead of the return in the same period in 2015.
Tax collection reached €11.14 billion to end-March. “This represents a year-on-year increase of €667 million (6.4 per cent) and is €119 million (1.1 per cent) above profile,” said the Department of Finance.
“However, allowing for €108 million of tax receipts delayed until April 1st due to a payment related timing issue, tax revenue is up €775 million (7.4 per cent) year-on-year and €227million (2.1 per cent) above profile.”
As talks continue on the formation of the next government, however, the data shows income tax collections were 12 per cent behind target in March and that VAT collections were 4 per cent behind target.
Income tax receipts, including the universal social charge, reached €1.22 billion in March, €165 million less than the €1.38 billion forecast by the department. The return in March was €136 million or 10.1 per cent less than the same month in 2015.
Income tax receipts reached €4.36 billion in the first three months of the year, up €114 million or 2.7 per cent on a year-on-year basis. This was €153 million or 3.4 per cent below target, which the department attributed to “an underperformance across a range of income tax components.”
VAT returns in March came in at €1.49 billion, €62 million or 4 per cent behind target. In the first three months the total VAT return was €3.89 billion, €193 million or 4.7 per cent below target.
“When consideration is made for[circa] €75 million of VAT receipts delayed from March into early April, receipts for the month are actually up €13 million or 0.8 per cent against target,” the department said.
“Looking at the cumulative performance, VAT receipts are actually up €173 million year-on-year, an increase of 4.5 per cent but down €118 million or 2.9 per cent against profile. This is in line with the positive data from February with retail sales up year-on-year, both in volume and value terms.”
In the terms of the overall return for the first three months, the income tax and VAT underperformance was masked a sharp rise in corporate tax receipts and an big rise in excise duties.
The figures show the State collected €407 million in corporate tax in March, €304 million or 296 per cent more than forecast for the month. Corporate tax payments in the first three months were €654 million, €305 million or 87 per cent ahead of target.
The surge represents a continuation of trends seen in 2015 when corporate tax returns came in well ahead of target.
Excise duties in March reached €575 million, €117 million ahead of target for the months. Collections in for the first three months reached €1.52 billion, €114 million or 8.1 per cent ahead of target.
The Exchequer deficit at the end of March was €1.17 billion, compared to a €197 million surplus in the same period in 2015.
The disimprovement in the Exchequer balance was “primarily due” to the base effect of the transfer last year of €1.63 billion from the National Pension Reserve Fund to the Exchequer.
“Excluding the impact of this significant one-off transaction, there was an underlying year-on-year improvement in Q1 2016 of €267 million driven by increased tax revenue,” the department said.
Total net voted expenditure reached €10.18 billion, €15 million or 0.2 per cent below profile and €71 million lower on a year-on-year basis.
Net voted current expenditure at €9.73 million to end-March was “marginally above” profile by €11 million. “The largest overspend of €38 million was recorded in the Department of Health, up 1.1 per cent on profile.”
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