Brian Lenihan Jnr (Dublin West, Fianna Fail)

At the end of May, €12.1 billion in tax revenue receipts had been collected. As Deputy Lynch points out in her question, this is a drop of approximately €1.4 billion on the amount collected in the first five months of 2009, which represents a year-on-year decline of 10.4 per cent. However, the monthly profiles for tax revenue published in early February, anticipated a significant year-on-year decline in the initial months of 2010, with receipts expected to recover during the course of the year to finish the year 6% down on 2009 in overall terms. This would represent a fall of just under €2 billion for the year as a whole.

In terms of the Government's budgetary targets, it is more appropriate to look at the performance of tax revenues against the monthly profiles. Overall, tax receipts in the first five months of the year were just €148 million below the target of €12.3 billion. This represents a shortfall of just 1%. While this is a slight worsening of the position at end-April, when receipts were on target, it should be noted that the amount scheduled for collection in May was large, representing the second highest monthly target for 2010.

On the individual tax-heads, receipts from VAT, corporation tax, capital gains tax, capital acquisitions tax and customs were all above target at the end of May, while income tax, excise duties and stamp duties were all below profile. The overall shortfall was largely driven by income tax receipts, which were €219 million below target for the first five months of the year. While the weakness evident in income tax receipts may be seen as a cause for some concern, it is too early to draw any conclusions for the outcome for the year as a whole. There has been considerable movement in the months to date, with income tax receipts hitting target in the months of March and April but falling short in the month of May. This performance has been echoed in other tax-heads, most notably VAT and corporation tax, where shortfalls in some months have been offset by surpluses in other months. While there are significant targets to meet in the months ahead, and no clear trend has emerged as yet, the budget 2010 forecast for tax revenues of just over €31 billion remains valid. We will assess the position further in light of the end of June Exchequer returns.

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