Michael McGrath (Cork South Central, Fianna Fail)
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1. To ask the Minister for Finance the position regarding the review of Exchequer tax revenue in view of 2017 tax revenue to April coming in €344 million under target, with specific reference to the shortfall in income tax, including the universal social charge, USC, corporation tax and excise; his views on the possibility of this persisting throughout 2017; the potential impact on the deficit for 2017; the potential impact on the fiscal space in 2018; if he revised the fiscal space; and if he will make a statement on the matter. [23771/17]

Michael McGrath (Cork South Central, Fianna Fail)
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This question relates to the Exchequer returns and, in particular, to the shortfall we have seen under a number of different tax headings so far this year. Income tax, corporation tax, excise duty and stamps are running well below profile. What are the Minister's views on the implications of this? Does he believe the trend is likely to continue during the course of the year? What are the consequences in terms of both the deficit and the fiscal space for the forthcoming budget?

Michael Noonan (Limerick City, Fine Gael)
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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.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister for his reply. It is early days yet and the alarm bells should not be ringing completely but the trend is a concern. It is not just a trend over one month; we are now looking at data for four months. I accept the point about corporation tax. We have not had any significant months for corporation tax receipts. Later in the year will tell a story in that regard. Corporation tax, as the Minister knows, now accounts for approximately 15% of our tax take. We are dependent on a small number of very large companies. There is one potential vulnerability in that regard.

The income tax issue is intriguing because although the receipts are up 1.2% year on year, we are 3.1% below profile. The unemployment rate is falling, thankfully, so one would expect income tax receipts to be stronger. In simple terms, is it attributable to a miscalculation in regard to the USC? Is there any other explanation that the Minister believes accounts for the trend? It is a concern. That should be acknowledged.

Michael Noonan (Limerick City, Fine Gael)
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I acknowledge that there is some concern. I hope circumstances will right themselves as the year goes by. With regard to the personal taxes, PAYE yield is in line with expectations. It is up a little. PRSI receipts are up but the USC receipts are down. What I have said in my reply does not fully explain the USC discrepancy. There is something else happening in respect of it. The Revenue Commissioners are examining it. I cannot throw further light on it today. I hope circumstances will right themselves as the year goes by. We will have a better idea about corporation tax after the May and June receipts come in. By the half-year point, we will see whether the initial concerns are justified or whether circumstances are righting themselves.

Michael McGrath (Cork South Central, Fianna Fail)
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My question really concerns how the approach needs to be adjusted if the trend continues. I refer to the budget in October, for example. What impact could there be on the calculation of fiscal space? I acknowledge a number of variables feed into that.

It is not just a question of income tax and corporation tax. The excise yield, for example, is 6.3% below profile. I realise it can be difficult to forecast what the receipts will be in a particular month but if the trend continues there will be a problem.

However, if the trend continues pro rata- it has been €344 million over the first four months - throughout the remainder of the year, the shortfall will be in the region of €1 billion. That is a big "if" and, hopefully, it will not continue. If it did, what issues would that throw up in our approach to the budget?

Michael Noonan (Limerick City, Fine Gael)
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First, the Deputy must recognise that some taxes are quite lumpy in the way they come in and the Revenue is still confident that the figures will right themselves as the year goes by. We can safely say at this stage that we will not have the overrun in tax receipts that we had over the past two years. The other side of the balance sheet is expenditure and that is running behind profile as well. We are more or less in balance at the moment but expenditure can accelerate as the year goes by. We hope it will stay in balance. We are not thinking of corrective actions yet. It is too early to do so but the first step always in correction is to make sure the expenditure does not exceed revenue flow.

Bernard Durkan (Kildare North, Fine Gael)
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Question No. 2 is the name of Deputy Pearse Doherty. The Ceann Comhairle has provided, given the Deputy is at a committee meeting, that his question can be taken within Priority Question time if he returns. We will move on to Question No. 3.