Irish tax take remains 0.3 percent below target

© Reuters. Offices in the Central Bank of Ireland are seen in the financial district in Dublin

DUBLIN (Reuters) – Ireland remained 0.3 percent or 127 million euros behind its tax revenue target for 2018 at the end of September, limiting the government’s room for a more generous budget package next week, unless, as expected, it raises money elsewhere.

Ireland has consistently beaten its revenue target in recent years, even as it gradually unwinds tax increases introduced during the financial crisis due to a rapid jobs recovery and the benefits of being a major location for multinational companies.

However while corporate tax receipts were 6.3 percent ahead of target at the end of the third quarter, income tax and value-added tax, the two largest tax categories, stood 0.1 percent and 0.3 percent below target. A large 8.0 percent underperformance in excise duty more than wiped out the company tax gains.

The total tax take, however, was still 5.2 percent up year-on-year, the data from the finance department showed on Tuesday, reflecting Ireland’s strongly performing economy.

Assuming fiscal targets are met, Irish Finance Minister Paschal Donohoe has a modest 800 million euros to dish out on further tax cuts and spending increases next year, having already committed over 2 billion through previously announced increases in current and capital spending.

Donohoe is expected to find extra money through measures under consideration including the scrapping or part scrapping of a reduced VAT rate for the tourism sector.

With expenditure 0.1 percent behind where the government had estimated it to be and up 8.9 percent year-on-year, the exchequer recorded a deficit of 1.47 billion euros for the first nine months of the year.

The government expects to run a deficit of 0.2 percent of economic output this year, although the central bank and independent fiscal watchdog has urged it to be more prudent and target a surplus.

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