Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank the Deputy for raising a number of interesting issues. On the headroom available, there is nothing in my speech that is optimistic about headroom at the end of the year. What everybody needs to remember is that the amount of money available will be the excess of the tax flow over expenditure when the deficit of 0.9% of GDP is taken into account. We are behind the curve in that regard after the first three months but we think we will make up ground as the year goes by. I would not envisage, as happened in previous years, that tax revenue will drive ahead such that there will be a lot of additional funds available for spending at the back end of the year to settle outstanding liabilities. I do not think it will go that way this year. I hope we will at least break even but I do not envisage a surplus on the tax flow side. The amount of money available is different from the amount that one can legally spend under the fiscal rules. In jumping from one to the other, one can get confused. As I said, we are a little behind in the first quarter in terms of the flow of taxation. As a consequence, there is a shortfall in terms of bringing the budget in as designed last October, but we hope that will correct as the year goes by.

On the fiscal space, on budget day we said that the space for next year would be €1.2 billion. We are planning against that, but as I said, there is already a carry-over of approximately €650 million, leaving €550 million as of today in terms of new distributions of funds. There is no headroom either on the tax flow side or in terms of fiscal space. I hope that the growing economy will generate more taxes. A portion of the shortfall is attributable to corporation tax not coming in evenly on monthly profiles. The bulk of that tax comes in in May-June and again in November. We hope it will come in again. There was an adjustment on corporation tax in 2015 which Revenue now says arose from the extra profitability of the corporate side, which drove the taxes. The difference between 2015 and 2016 was approximately 7% such that there was not a dramatic change in tax flow. Corporation tax accounts for approximately 15% of all taxes. VAT and income tax drive the tax base. We presume corporation tax will come in right as the year goes by but we do not envisage any dramatic shifts on it one way or the other. As I said, there is very little headroom on the tax flows and the fiscal space.