Written answers

Thursday, 16 June 2016

Department of Finance

Tax Collection Forecasts

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein)
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76. To ask the Minister for Finance why he did not revise the predicted level of tax revenue from budget 2016 upwards, consistent with the out-turn of the stronger 2015 revenue base; the reason for his approach to the 2016 corporation tax forecast; and if he will make a statement on the matter. [16432/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I assume the Deputy is referring to the tax revenue forecast set out in the recent Stability Programme Update. As the Deputy will be aware, it was forecast in Budget 2016 that overall tax revenues for this year would grow by 5.8 per cent to approximately €47.2 billion and were profiled on that basis. As part of its earlier preparations for the Stability Programme Update, the 2016 tax revenue forecasts were reviewed by my Department in the context of their performance against profile year-to-date.

On the basis of developments to the end of March 2016, it was decided not to revise the tax revenue forecast, as overall receipts were only 1.1 per cent (€119 million) above profile at-end Quarter 1. Income tax and VAT, which are expected to account for just over two thirds of the total take yield in 2016, were marginally below profile. Income tax finished the quarter down €153 million (3.4 per cent) and VAT was down €193 million (4.7 per cent) respectively against target.

Excise duties and corporation tax performed strongly during the first quarter of 2016, up €114 million (8.1 per cent) and €305 million (87.3 per cent) respectively against profile. However, it should be noted that the Revenue Commissioners had informed my Department that the over-performances were been driven by specific issues, some of which are expected to "unwind" as the year progresses. For example, in relation to excise duties there has been a significant front-loading of tobacco stocking in advance of the commencement of the plain packaging initiative. Meanwhile, the over-performance in corporation tax to the end of March was wholly attributable to a number of large unexpected payments from a small number of companies, which could be repaid over the course of the year.

Finally, I would point out that since the Stability Programme Update 2016, tax revenue performance has been strong and at end-May 2016, receipts were up €774 million (4.3 per cent) above profile, which represents a 9.0 per cent (€1,549 million) increase when compared to same period in 2015. This solid performance is being reviewed as part of the upcoming Summer Economic Statement 2016.

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