Information Note on end-August 2012 Exchequer Returns

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Tax Revenue
• Tax revenue details are set out in Appendix I, available at
• Tax revenues to end-August, at just under €22.1 billion are €365 million (1.7%) ahead of
target. At end-August three of the “big four” sources of tax revenue are ahead of profile.
• In year-on-year terms, taxes are up almost €1.6 billion or 7.7%. Adjusting for the impact of
delayed corporation tax receipts and the PRSI to income tax reclassification issue, the yearon-
year growth rate is lower, though still a robust 5.2%.
• Income tax is €102 million or 1.1% ahead of target cumulatively although receipts were
below target in August for the second consecutive month. Income tax developments will
continue to be closely monitored in September. Adjusting for the impact of the PRSI to
income tax reclassification issue, income tax is up close to 10% on the same period last
year, a strong performance. Quarter 4 is a very significant period for income tax, given the
concentration of returns from the self-employed, and receipts in that period will be crucial
in determining the overall outturn for the year as a whole.
• VAT is €82 million (1.2%) ahead of target cumulatively at end-August and on a year-onyear
basis receipts are up €207 million (3.1%) on the same period last year. This is a solid
performance. September is the next VAT “due” month.
• Corporation tax continues to perform above expectations and after eight months of the year
is €310 million (17%) ahead of profile. It is important to acknowledge the significance of
the latter part of the year in terms of corporation tax collection. €2 billion is profiled for
collection in the three month period September – November and this will have a
considerable role in determining the end-year outturn.
• Excise duties – the fourth of the “big four” taxes – weakened in August and are now €116
million 3.8% below profile cumulatively and 1.5% lower year-on-year. Part of the shortfall
against profile can be attributed to a timing issue around the transfer of receipts, arising
from the Budget 2012 motor tax increases, from the Local Government Fund.
• Stamp duties in the month of August were on target although on a cumulative basis receipts
are running a little behind expectations at €45 million (10.2%) lower than planned.
However this shortfall is largely explained by a timing issue relating to receipts from the
Jobs Initiative pension levy.
Voted Expenditure
• Net voted expenditure details are set out in Appendix II, available at
• There are two significant receipt issues on the expenditure side – a shortfall in PRSI
receipts and earlier than expected HSE receipts. Adjusting for these items the underlying
voted expenditure position is just over €200 million above expectations.
• Looking at Appendix II, total net voted expenditure, at €29.6 billion, is €317 million (1.1%)
ahead of expectations and €244 million (0.8%) up year-on-year. 12 of the 16 Vote Groups
are managing expenditure within allocations but the overruns in the Social Protection and
Health Vote Groups, which have been evident for much of the year, remain.
• Net voted current expenditure, at €28 billion, is €437 million (1.6%) higher than planned.
This is primarily caused by overspends in the Social Protection and Health Group Votes.
• Over half of the Social Protection Vote Group overspend of €381 million (4.2%) is due to a
shortfall in PRSI receipts. On the other hand the earlier than expected receipt, in July, of
€130 million from the UK Department of Health means that the Health Vote Group
overspend of €128 million (1.5%) is understated by this €130 million.
• Net voted capital expenditure at just under €1.6 billion is €120 million (7.1%) below profile
and €415 million (20.9%) down year-on-year. The most significant underspends against
profile occur in the Environment and Jobs, Enterprise and Innovation Vote Groups.
Debt Servicing
• Exchequer debt servicing costs, at just under €4.8 billion, are €188 million (3.8%) less than
profiled in early February. In year-on-year terms Exchequer debt servicing costs are up
some €2.2 billion. There are two factors which explain close to half of this increase:
1) Sinking Fund payment timing – it took place in November last year but March this year.
2) Use of the Capital Services Redemption Account (CSRA) for debt servicing purposes in
2011 – expenditure from the CSRA does not impact the Exchequer and so Exchequer debt
servicing was €½ billion lower than it would otherwise have been at end-August 2011.
• On a like-for-like basis therefore debt servicing costs are up close to €1.1 billion, largely
due to the timing of interest payments on EU/IMF Programme loans (many of the 2011
loans have a first interest payment in 2012) and an increase in the level of debt outstanding.
Exchequer Balance
• The Exchequer deficit at end-August was €11.3 billion, down €9.1 billion on the €20.4
billion deficit recorded at end-August last year. The main driver behind the large reduction
is lower non-voted capital expenditure due to (i) settlement of the 2012 IBRC Promissory
Note payment with a Government bond and (ii) the fact that July 2011 banking
recapitalisation payments increased non-voted capital expenditure significantly last year.
• The Exchequer position is also improved by increased tax and non-tax revenues and lower
net voted capital expenditure. These improvements are somewhat offset by higher nonvoted
current expenditure – due to increased debt servicing costs – and higher net voted
current expenditure.