Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I propose to take Questions Nos. 22 and 60 together.

Given overall tax performance, I assume the Deputy is referring to income tax, which has performed steadily in the first six months of 2017.  It is up 3.1% or €274 million on the same period last year. However, income tax receipts of €9,045 million, or just over €9 billion, were slightly behind profile, down 2.3% or €214 million. Those are the year-to-date figures. This shortfall against target is across a range of income tax components.

 Income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. Some of these components are having a drag on overall income tax receipts in the first half of this year. 

The key component, PAYE income tax, which accounts for around 65% of total income tax receipts, was broadly in line with profile at the end of June. It is down 0.8%, which is €51 million.  This indicates an annual growth of 7.7%, or €462 million, versus a year ago.    

Notwithstanding this, the performance of USC was lower than originally expected at the end of June, with receipts down 4.8%, or €83 million below target, and officials from my Department and the Revenue Commissioners have been looking into this.  As part of my review, my Department and Revenue have re-examined the budget 2017 USC costings and we are satisfied that they are as accurate as possible given the complexities involved in forecasting. 

Furthermore, as part of the continuous efforts to improve the Department's tax forecasting performance, the ESRI and my Department jointly examined the sensitivity of income tax and USC revenues to changes in income. As a result of this work, which was published in March of this year, the Department has revised the income tax and USC revenue elasticities used in the forecasting process. These new elasticities were and will be used in the forecasts for 2018 and subsequent years in the 2017 stability programme update, which is published in April.   However, it should be noted that a back-casting using the revised elasticities would obviously imply a lower USC forecast for this year.

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