Róisín Shortall (Dublin North West, Social Democrats)
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81. To ask the Minister for Finance the reason for the apparent contradiction in the growth of employment and the reduced income tax take in 2016; and if he will make a statement on the matter. [19040/17]

Michael Noonan (Limerick City, Fine Gael)
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I assume that the Deputy is referring to the income tax yield in the first quarter of 2017.The income tax performance in 2016 was solid with receipts of €19,169 million recorded, finishing the year 0.9 per cent or €174 million above target.This represented a strong year-on-year increase of 4.4 per cent or €810 million. 

In relation to the first quarter of 2017, the position is that income tax recorded annual growth of 1.4 per cent or €62 million in the year to-end-March.  However, income tax receipts of €4,417 million were 3.9 per cent below profile.  The shortfall against target is attributable across a range of income tax components.

It is important to point out that income tax encompasses a broad range of components, 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 and Back Duty, with some of these components having a drag on the overall income tax receipts in the first quarter of 2017.

The Revenue Commissioners inform me the PAYE component of USC is €63 million or 7 per cent below profile, which represents a year-on-year decrease of 12 per cent (€107 million).  The Deputy will appreciate that a reduction in USC was expected in 2017 given the measures I introduced in Budget 2017.  Notwithstanding this, the performance of USC is lower than expected and the Revenue Commissioners, along with officials from my Department, are looking into the matter.

Furthermore, it should be noted that we were in a similar position at the end of the first quarter in 2016income tax was up 2.7 per cent (€114 million) year on-year, but down 3.4 per cent (€153 million versus profile).However, due to a pick-up in receipts throughout the remainder of year, income tax finished 2016 ahead of target.

In terms of consistency with employment growth, I would point out that PAYE is up 6 per cent and PRSI is up 7 per cent in the first quarter compared to the same period last year, both of which indicate that employment continues to grow strongly.  

Finally, I would highlight that, with just three months tax data, it remains too early to discern any firm trends.