Ireland met 2012 deficit target ‘by significant margin’

4 Jan 13
A late surge in tax revenues ed Ireland to outperform expectations last year and meet its deficit goal, the Department of Finance said yesterday.

By Nick Mann | 4 January 2013

A late surge in tax revenues ed Ireland to outperform expectations last year and meet its deficit goal, the Department of Finance said yesterday.

The Exchequer statement for 2012 shows total tax collected for 2012 was €36.6bn – an increase of 7.7% on the €34bn recorded in 2011. If one-off factors are excluded, the increase was 5.3%.

VAT and corporation tax revenues were both higher than expected, more than offsetting shortfalls in income tax and excise duties. In particular, corporation tax received in December was ‘significantly above profile’ owing to two large payments, the department noted.

Finance Minister Michael Noonan welcomed the ‘significant’ increase in tax revenues. ‘Encouragingly, after some weakness in recent months, taxes were particularly strong in the month of December,’ he said. ‘This is a positive development as we start the new year. It gives me further confidence that the Budget tax revenue target for 2013 is both robust and achievable.’

‘Underlying’ government spending was ‘in line’ with the 0.4% increase expected, the department said. However, a 5% shortfall in income from Pay Related Social Insurance meant total approved expenditure increased by 1.2% on the previous year.

A joint statement by Noonan and the minister for public expenditure & reform, Brendan Howlin, said Ireland was set to meet its general government deficit target of 8.6% of gross domestic product in 2012 by a ‘significant margin’.

But they added that the €3.5bn package of spending cuts and tax increases announced in last month's 2013 Budget was still needed to reduce Ireland’s deficit further and allow it to eventually leave the European Union-International Monetary Fund bailout programme.

Notwithstanding the significant progress we are making, we cannot lose sight of the fact that we continue to spend more than we collect in revenue,’ the ministers explained. ‘The Exchequer deficit, at close to €15bn in 2012, is too large and the government remains committed to reducing it further in the coming years. The measures introduced in Budget 2013 are the latest step in that regard. Stable public finances are an essential prerequisite to economic growth and job creation.

They added: ‘Ireland is making strong, consistent progress towards emerging from the programme and today’s figures show that the measures we are implementing to close the deficit in our public finances are working. Our recovery is on track.’

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