Tax revenues at end-October 2011, at €26.7 billion are almost €2 billion (8%) higher than in the same period last year. This year-on-year increase is due in large part to income tax growth of almost 22%, which is primarily the result of the measures introduced in Budget 2011, most notably the USC. Stamp duties recorded a 52% year-on-year increase due to receipts from the Jobs Initiative pension levy. Excise duties are marginally up also but both VAT and corporation tax receipts fell in the year to end-October.
Tax revenues are €184 million (0.7%) below target at end-October. This is a disimprovement on the position at end-September when taxes were €160 million (0.7%) ahead of profile. The monthly shortfall in October was largely anticipated however as some income tax (DIRT) payments originally profiled for collection in October were received earlier than anticipated, in April and July.
Income tax is therefore now €125 million (1.2%) below target. Given the very large year-on-year increase projected at Budget time, owing to the introduction of the USC and other significant revenue raising measures, this can be viewed as a good performance. Excise duties, the third biggest source of tax revenue, are slightly ahead of target (+€17 million or 0.5%) so far in 2011. The large excise duty surplus in the month of October owes much to the collection of some revenues which were actually proper to September.
On foot of a shortfall of €83 million in the month of October – the fifth consecutive monthly shortfall – VAT is now €383 million (4.5%) below profile on a cumulative basis, reflecting weak domestic demand conditions. Corporation tax is €109 million (4.2%) below profile. November is the key month of the year for corporation tax receipts and its performance will have a significant bearing on the end-year outturn. The large stamp duty surplus at end-October can be explained by payments of some €460 million from the levy on pension funds. These were not included in the original profile for stamp duty, published in early February.
Voted Expenditure
Total net voted expenditure at end-October, at €37 billion, is €176 million (0.5%) down year-on-year. Net voted current spending is up €788 million (2.3%) but net voted capital expenditure is €965 million (27.4%) down. Adjusting for the reclassification of health levy receipts to form part of the USC, it is estimated that total net voted expenditure fell 4.1% in the year to end-October (net voted current expenditure fell 1.8% on the same basis).
Compared to profile, total net voted expenditure is down €941 million (2.5%) at end-October. Net voted current expenditure is €571 million (1.6%) below profile with the main underspends on the Education & Skills, Agriculture and Social Protection Votes of €136 million (2.1%), €135 million (17.5%) and €123 million (1.1%) respectively. The Education & Skills underspend is due to lower than anticipated expenditure across a number of areas, mainly as a result of the timing of certain payments. The Agriculture underspend is due to lower than expected expenditure on a number of schemes. The Social Protection Vote underspend is due to higher than expected PRSI, which are offsetting overspends on some schemes, including Jobseekers Allowance. The main current expenditure overspends arise on the Health and Justice Vote Groups.
Net voted capital expenditure is €371 million (12.6%) below target at end-October, largely due to shortfalls in the expenditure of the Environment, Transport and Agriculture Vote Groups of €104 million (16.1%), €69 million (9.8%) and €60 million (26.8%) respectively.
Overall, while there are some compositional changes, the aggregate net allocation published in the Revised Estimates Volume remains the aggregate net spending target for 2011.
Debt Servicing
Total debt servicing expenditure at end-October 2011, including funds used from the Capital Services Redemption Account, is just over €4.2 billion. Excluding the sinking fund payment which had been made by end-October in 2010 but which has not yet been made in 2011, debt servicing costs to end-October 2010 were €3.3 billion. The year-on-year increase in total debt servicing expenditure is therefore just over €900 million.
Overall Exchequer Position
The Exchequer deficit at end-October 2011 is €22.2 billion compared to a deficit of €14.4 billion in the first ten months of 2010. The €7.8 billion increase in the deficit is mainly due to non-voted capital expenditure banking related payments of €3.1 billion in Promissory Note payments to Anglo Irish Bank, INBS and EBS, and just over €7½ billion in once-off payments relating to July’s recapitalisation of the banking sector. Excluding these payments and the €1 billion in capital receipts from the sale of the part of the State’s shareholding in Bank of Ireland, the Exchequer deficit fell by over €1.8 billion compared to the same period in 2010.