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Tax revenues at end-July, at €18.6 billion were €1½ billion or 8.6% higher than in the same period last year. This year-on-year increase was due primarily to higher income tax receipts, arising from the Budget 2011 measures, including the introduction of the USC. Excise duties, corporation tax, customs duties and stamp duties all recorded year-on-year increases also. There was however a small year-on-year fall in VAT receipts.

Tax revenues were €263 million or 1.4% above target at end-July. Notably, three of the “big four” taxes –income tax, corporation tax and excise duties – recorded surpluses in the first seven months of the year. Income tax was €160 million or 2.2% above target at end-July. Excluding the beneficial impact of earlier than expected DIRT payments, both in April and July, income tax was a little below target in the first seven months. That said, the underlying performance of income tax in recent months has been encouraging, with the targets for both June and July marginally bettered. Corporation tax was €93 million or 6% above target at end-July. The very large surplus in the month of July arose partly because of a delay in payments from May. While this was expected, the extent of the delayed payments was in excess of what had been anticipated.

Excise duties recorded a €67 million (2.6%) surplus in the first seven months of the year. However, VAT – the other of the “big four” taxes – recorded a shortfall against target in the period to end-July of €190 million (2.9%). A significant element of this shortfall has been evident since end-February. The large stamp duty surplus at end-July can be explained by earlier than expected payments of just over €100 million in July in respect of the pension fund levy, which was introduced to finance the Jobs Initiative. Each of the other smaller taxes has performed above or in line with expectations so far in 2011.

Total net voted expenditure at end-July, at €25.7 billion, was €224 million or 0.9% up year-on-year. Net voted current spending was up €813 million or 3.5% but net voted capital expenditure was €589 million or 26.4% down. Adjusting for the reclassification of health levy receipts to form part of the USC which has the effect of increasing net voted expenditure, it is estimated that total net voted expenditure fell 2.6% year-on-year.

Compared to profile, total net voted expenditure was down €536 million or 2% at end-July. Net voted current expenditure was €341 million or 1.4% below profile. The main underspend was on the Social Protection Vote (-€125 million) and was due to higher than expected PRSI receipts which more than offset excess expenditure across a number of schemes. The other main underspends were on the Education & Skills (-€116 million) and Agriculture, Fisheries & Food (-€95 million) Votes. These were largely due to timing issues with respect to certain payments and receipts, and offset pressures arising in other areas of expenditure.

Net voted capital expenditure was €195 million or 10.6% below target at end-July, largely due to shortfalls in the expenditure of the HSE, Environment and Agriculture Votes of €45 million, €43 million and €30 million respectively. These shortfalls against target were largely caused by timing factors and net voted capital spending is expected to be in line with target for the year as a whole.

Total debt servicing expenditure at end-July, including funds used from the Capital Services Redemption Account was just over €3 billion. Excluding the sinking fund payment which had been made by end-July in 2010 but which has not yet been made in 2011, debt servicing costs to end-July 2010 were some €2¼ billion. The year-on-year increase in comparative total debt servicing expenditure therefore was €¾ billion.

The Exchequer deficit at end-July 2011 was €18.9 billion compared to a deficit of €10.2 billion in the first seven months of 2010. The increase in the deficit was due to non-voted capital expenditure banking related payments, including €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 the recapitalisation of the banking sector announced following the PCAR stress tests at end-March. Excluding these payments, the Exchequer deficit fell by almost €2 billion.