By Eamon Quinn
Exchequer figures, which show spending is growing faster than tax revenues, should give the Government cause for concern, say analysts.
Up 8.5% from a year earlier, spending rose faster than the 5.4% increase in tax revenues, according to the figures for the first six months of 2018.
Tax revenues, at over €24.9bn for the first half of the year, almost matched the targets set in Budget 2018.
So-called net voted expenditure was also on target, but health spending of €7.63bn stood out, with a €168m over-spend at this stage in the year.
Government officials said that a “job of work” was required to get an understanding of the health expenditure figures, although increased recruitment had contributed to the increased spending.
Corporation tax receipts will overshoot targets again this year, after exceeding their target last month.
At just over €4bn at the half-year, the Government has collected €335m, or over 9%, more from company taxes than it had expected. Officials told reporters that a new payments system had allowed companies to make up for repayments in earlier years, helping boost receipts in May.
Corporate taxes performing well in June, suggesting receipts would outperform for the whole of 2018. Most of the other big tax sources also outperformed in June.
Income taxes, which include USC revenues, brought in €111m, or over 7%, more than was anticipated in June, and at €9.74bn, income taxes were on target for the first six months.
The department said it was “very happy” with the performance of income taxes after issues with the tax source last year had been worked through.
At over €7.1bn, Vat revenues were on target over the first six months, and were rising in step with increases in retail sales, said the department.
However, the fourth largest source of tax revenues, excise duties again underperformed in the latest month and brought in €188m less than anticipated over the full six months.
Officials said the flow of excise revenues had been disrupted by the proposed introduction of plain packaging for tobacco products, as companies built up stocks in previous years.
Austin Hughes, chief economist at KBC Bank, said the figures show an economy that is doing well but one that is “not roaring ahead”.
He warned the Government should be keeping a close eye on the growth in spending. Davy chief economist Conall Mac Coille said there were concerns “that expenditure discipline is being eroded in the high spending departments”.
