The following statement on the end-September 2012 Exchequer Returns was issued today (Tuesday, 2nd October 2012) 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-September 2012 Exchequer Returns, Minister Noonan & Minister Howlin said:
“The Exchequer Returns for the period to end-September 2012 highlight the progress that the Government is making in restoring the public finances to a more sustainable position. The tax base is growing, the majority of Departments are managing expenditure within allocations and where there are overruns action is being taken to bring these under control. All Departments must take the necessary measures to deliver services within their 2012 allocations. Overall, we are on track to meet our budgetary targets for the second consecutive year and September 2012 is the third month this year in which Exchequer revenues exceeded expenditure. This last happened in 2007.
However, despite this significant progress the deficit, at €11 billion for the first nine months of the years, remain too high and the Government is committed to reducing it further in the coming years.
We continue to meet all our fiscal targets under the EU/IMF programme, the latest being the end-September Exchequer primary balance target, the eighth consecutive such target to have been achieved.
Indeed, the return of the NTMA to the bond markets during the summer for the first time since the autumn of 2010 is a measure of the progress Ireland has made towards emerging from the Programme. It illustrates that actions taken by the Government have been recognised by investors and that Ireland’s recovery is on track.”
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Commenting on the end-September 2012 tax receipts, Minister Noonan stated:
“Tax receipts have continued their good performance seen throughout the year with the tax take at just over €26 billion for the first nine months of the year significantly ahead of the same period last year and €385 million ahead of profile. Three of the ‘big four’ tax heads - income tax, corporation tax and VAT - continue to perform ahead of profile with three quarters of the year already passed. The strong performance of VAT is particularly welcome and highlights the robust nature of measures introduced in Budget 2012.
Although challenging targets still remain for the last quarter, I am confident that the overall tax revenue target for 2012 tax receipts can be achieved.”
Commenting on voted expenditure in the first nine months of 2012 Minister Howlin stated;
“Departmental Expenditure remains less than 1% above expectations at the end of September, with the majority of Departments continuing to manage within their agreed limits. While there are pressures in the health and social protections areas, I will continue to work closely with my colleagues to ensure that we continue to meet our targets under the Joint EU/IMF Programme of Financial Support.
I would also like to take this opportunity to welcome the new format for Exchequer information launched today alongside the traditional presentation. This is an important step in introducing further transparency to the treatment of the public finances and complements the continuing reform of budgetary procedures by both my own Department and the Department of Finance, including the publication of legislation to introduce expenditure ceilings at the end of last week.”
Notes for Editors
Tax Revenue
· Tax revenues at-September 2012, at €26.1 billion, are €2,020 million (8.4%) ahead of the same period last year and €385million (1.5%) ahead of profile. On an adjusted basis, that is adjusting for delayed corporation tax receipts from December 2011 & the PRSI/income tax reclassification issue, tax revenues are an estimated 6.2% up year-on-year. Three of the “big four” sources of tax revenues continue to perform above expectations with three quarters of the year passed.
· Income tax is €101 million (1.0%) ahead of profile at end-September, and is up just over 9.5% year-on-year on an adjusted basis. The last quarter 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.
· Corporation tax is €251 million (11.4%) ahead of profile in the period to end-September and is up 7.4% year-on-year on an adjusted basis. As with income tax, it is important to also acknowledge the significance of the last quarter of the year in terms of corporation tax collection. €1.8 billion is profiled for collection in the three month period October – December and this will have a considerable role in determining the end-year outturn.
· VAT is €94 million (1.1%) ahead of target cumulatively and on a year-on-year basis receipts are up €264 million (3.3%). This is a positive performance and receipts in the ‘due’ month of September were marginally ahead of profile, as they were in July, the previous ‘due’ month.
· Excise duties, the fourth of the “big four”, came in below target for the third consecutive month in September, and receipts are now €135 million (3.9%) behind the cumulative target at end-September.
· Stamp duties are now €51 million (4.3%) ahead of target cumulatively owing to the strong performance in September and are €117 million (10.4%) ahead of the same period last year.
Voted Expenditure
· Total net voted expenditure, at €33,248 million at end-September, is €338 million (1.0%) ahead of profile. In year-on-year terms, net voted expenditure is €105 million (0.3%) below the same period in 2011. Adjusting for the shortfall in PRSI receipts of €245 million at end-September the underlying performance of net voted expenditure was around €93 million ahead of target.
· Net voted current expenditure, at €31,542 million at end-September, is €606 million (2.0%) ahead of profile, due primarily to overspends in the Department of Social Protection (caused in large part by the PRSI shortfall) and the Health Vote Group.
· Net voted capital expenditure at end-September, at €1,706 million, is €268 million (13.6%) below expectations and €474 million (21.8%) down year-on-year with the main underspends against profile on the Environment and Jobs, Enterprise & Innovation Votes.
Debt Servicing
· Exchequer debt servicing costs, at €4,845 million to end-September 2012 are €212 million (4.2%) less than the profile published in early February. On a year-on-year basis Exchequer debt servicing costs are up just over €2.3 billion. There are two factors which explain a large part of this increase:
Timing of the Sinking Fund payment – in 2011 it took place in November to coincide with a Government bond maturity whereas this year it took place in March.
A net €551 million was used from the Capital Services Redemption Account (CSRA) for debt servicing purposes in the first nine months of 2011. Expenditure from the CSRA does not impact the Exchequer.
· On a like-for-like basis therefore debt servicing costs are up approximately €1.1 billion year-on-year at end-September.
Exchequer Balance
· The Exchequer deficit at end-September 2012 is €11,134 million compared to €20,660 million in the same period last year. The main driver behind the large decrease 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 the July 2011 banking recapitalisation payments were not repeated in 2012.
· The Exchequer surplus recorded in September is the third monthly surplus this year.
EU/IMF Programme Exchequer Primary Balance Target
· As part of the quantitative performance criteria of the Technical Memorandum of Understanding (TMU) of the EU/IMF Programme, a target for the end-September 2012 Exchequer primary balance (EPB) – the Exchequer balance excluding Exchequer debt interest expenditure – of –€10.6 billion was set.
· Under the terms of the TMU the EPB is adjusted for:
(i) payments for bank recapitalisation and credit union funding, and,
(ii) any over/under-performance in Exchequer tax revenues and gross PRSI receipts combined compared to the TMU estimate.
· In June, there was a €1.3 billion Exchequer payment in respect of the acquisition of Irish Life Limited which completes the recapitalisation of Irish Life and Permanent.
· Exchequer tax revenues and gross PRSI receipts amounted to a combined €31.2 billion at end-September 2012, which is €0.5 billion higher than the TMU estimate of €30.7 billion.
· As shown in the table, the adjusted EPB target is –€11.4 billion. The EPB[1] at end-September 2012 is –€10.1 billion, meaning the target has been achieved. This is the eighth consecutive end-quarter EPB target to have been achieved since the Programme commenced. Adherence to the target will be confirmed during the forthcoming Programme review mission.
End-September 2012 (€ billion) TMU
Target Banking
Adjuster Revenue
Adjuster Adjusted
Target Outturn
EPB -10.6 -1.3 +0.5 -11.4 -10.1
Legislation to provide for Expenditure Ceilings
In last December’s Comprehensive Expenditure Report 2012-2014 the Minister for Public Expenditure & Reform introduced a medium-term expenditure framework for Ireland, with fixed Ministerial current expenditure ceilings covering the three-year period ahead.
Legislation published on Friday, 28 September puts this reform measure onto a permanent, statutory footing by introducing the concept of “Ministerial expenditure ceilings” into law: these are apportionments of the three-year aggregate “Government expenditure ceilings” which are also provided for in this legislation, and which have binding effect upon the annual “Estimates” (or actual expenditure determinations).
This legislation is available here:
http://www.oireachtas.ie/viewdoc.asp?DocID=21814&&CatID=59