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

Cumulative Exchequer tax revenues at the end of April 2017 were slightly below profile, coming in just 2.4%, or €344 million, under expectations. In terms of the "big four" tax headings, corporation tax, income tax and excise duties recorded shortfalls against profile, but VAT was ahead of expectations. Corporation tax receipts of €587 million were collected to the end of April. As a result, cumulative revenues were down 27.6%, or €223 million, against target. It is important to point out that Exchequer receipts from corporation tax can vary throughout the year and just over 10% of the total annual receipts was expected in the first four months of the year. By comparison, over 60% of corporation tax receipts are expected during May, June and November. Due to the non-linear nature of corporation tax receipts, the potential for company-specific factors and the low proportion of the annual receipts received to date, it would be premature to draw any conclusions about corporation tax at this stage of the year.

Income tax receipts to the end of April were 3.1%, or €198 million, below profile. It is important to point out that income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. These include deposit interest retention tax, life assurance exit tax, dividend withholding tax, professional services withholding tax and back duty. These payments, by their nature, can be non-linear and timing can vary from year to year. I am informed by the Revenue Commissioners that the majority of these specific components were causing a drag on overall income tax receipts in the first four months of 2017.

Notwithstanding this, the performance of the USC is lower than expected, and my Department is currently reviewing its performance, in conjunction with the Revenue Commissioners. The initial indications are that the Revenue Commissioners are satisfied that the overall estimate of the budget 2017 package in respect of USC changes was costed accurately at €335 million. At the time of budget 2017, the apportionment of the total USC package between PAYE and schedule D was expected to be €263 million and €72 million, respectively, in line with previous norms. However, subsequent analysis by the Revenue Commissioners indicates that the allocations of the USC package between PAYE and schedule D should have been €311 million and €24 million, respectively, due to the dynamics of the USC package. While, this helps to explain some of the current under-performance against profile for USC paid by PAYE taxpayers, it is important to point out that this reapportionment should have no adverse impact on the overall collection of the USC receipts as they should equalise later in the year when self-employed returns are made.

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