The end-of-year Exchequer Returns have been released and we can update our analysis from November. Also remember that the Exchequer Account is not the Public Finances!
For the full year tax revenue came in at €31.75 billion, ahead of both the Department’s forecast and my own, but still down on the 2009 tax take.
As has been the trend since September the annual rate of decline eased again in December and for the full year tax revenue was €1.3 billion or 3.9% behind last year’s level. However, when compared to the same month last year, tax revenue in December was just under 1% lower than in December 2009. This is the first time this comparison has been negative since August.
Somewhat worryingly most of the €1.3 billion decline in tax revenue relative to 2009 can be attributed to two of the ‘barometer’ tax headings – Income Tax and VAT. Both of these for more than €500 million behind their 2009 levels.
Of the four main tax heads, only Corporation Tax came in ahead of the 2009 number and that was by a paltry €24 million. The picture is not quite so bleak if we do a fourth quarter comparison across the two years. Q4 tax revenue is actually €242 million ahead of the equivalent 2009 figure.
However, this is directly attributable to a 33% surge in Corporation Tax receipts. Although slightly moderated the decline in Income Tax and VAT continued with no other significant gain outside of Corporation Tax. But at least it is better than this.
Although December isn’t a hugely significant tax month, accounting for only 7% of annual tax revenue, for completeness we will isolate the monthly figures.
You can track the performance during the year of the four main tax heads by clicking on the list below.
December was only the second time in 2010 when monthly Income Tax receipts were ahead of their 2009 equivalent. December is not an important VAT month but monthly receipts were still down over a quarter on 2009. More important, as can be seen by clicking the link above, VAT receipts in all of the main VAT payment months (Jan, Mar, May, Jul, Sep & Nov) were behind their 2009 equivalents.
The late increase in Corporation Tax receipts meant that December was the first month when the cumulative comparison was positive. By August Corporation Tax receipts were €582 million behind the amount collected at the same time in 2009. However, the monthly increases seen in every month since then has meant that this deficit was completely wiped out (even if the swing to positive was only by €24 million).
Excise Duty did not display much volatility. The monthly comparisons to 2009 were positive for five months and negative for seven, and for the year as a whole Excise Duty was only €24 million or 0.5% behind the 2009 level. This was likely aided by the introduction the Carbon Tax on different fuels throughout the year and the increase in new car sales throughout the year that would have boosted Vehicle Registration Tax receipts.
Here are the graphs. Click smaller images to enlarge.
This is first time that I seen the month tax returns in this format together with their prior year comparison.
ReplyDeleteAfter a positive few months, Dec 2010 looks to have taken a real turn for the worse.
Hi Tumbrel,
ReplyDeleteThe usual analysis of tax revenues relative to DoF targets is pretty useless. Those targets are not real numbers. You are right, though, that there was a bit of a turnaround in December after three months of positive comparisons to the same month of the previous year.
These comparisons will become less meaningful in 2011 as the tax changes announced in the Budget come into force. This will be particularly true for Income Tax (and total tax revenue) as the changes were concentrated here. We don't get monthly PRSI figures so the effect of those changes will be largely hidden. However, for the other tax heads the changes were minor so it will be interesting to see how VAT, Excise, Corporation Tax and the rest perform relative to the 2010 levels.