The following statement was issued today (Monday, 4th July 2011) by the Minister for Finance, Mr. Michael Noonan, T.D. and the Minister for Public Expenditure and Reform, Mr. Brendan Howlin, T.D.
Commenting on the end-June 2011 Exchequer Returns, Minister Noonan said:
“The Exchequer deficit in the first six months of the year, at €10.8 billion, is in line with my Department’s expectations at this point in the year. Excluding banking related payments in the first half of 2011, the deficit decreased by over €1 billion.
The end-June Exchequer Primary Balance target set as part of the Joint EU/IMF Programme of Financial Support was also met, which is to be welcomed.
Tax receipts in the period to end-June, at €15.3 billion, were almost 6% above the same period in 2010. This is encouraging following three years when tax revenues fell by one-third. Taxes were however slightly below expectations with a shortfall of 0.7% or €115 million compared to profile being recorded in the first six months of the year. This shortfall must be viewed in the context of a target of almost €15½ billion. However, it is the case that individual tax-heads have shown a mixed performance so far in 2011. Corporation tax and VAT were a little weaker than expected. On a more encouraging note, income tax is in line with what is a very large target due to the introduction of the Universal Social Charge and other budget measures. Receipts from excise duties have continued the good performance of last year into the first half of 2011.
Although there is some weakness in certain tax-heads, the Budget day target for tax revenue in 2011 of €34.9 billion remains achievable, especially given the expected boost to taxes this year from the pension levy introduced to fund the Jobs Initiative.
Commenting on expenditure in the first six months of 2011 Minister Howlin stated;
“I welcome the fact that overall voted expenditure is being managed within the limits set out for the year and at end-June was 1½% below profile. This reflects the ongoing tight control of public spending. We must ensure that this tight control is maintained over the coming months and that emerging pressures, of which there are some, are managed by Government Departments from within their existing allocations.
In conclusion the two Ministers added:
“It is encouraging that we are meeting our targets and that the overall public finance position is generally in line with expectations at this point. However, given the significance of achieving our budgetary targets, there can be no room for complacency and the Government is determined to implement the Comprehensive Review of Expenditure.
Last week’s implementation of the VAT reduction and the change to the minimum wage are important measures to tackle and overcome our present difficulties. Through the continued implementation of the right economic and budgetary policies we can return our economy to sustainable growth.”