DUBLIN (Reuters) - Ireland’s tax take rose to 7.6 percent above target at the end of October as corporation tax receipts came in almost 75 percent higher than expected, leaving the government on course to beat a year-end deficit target it only recently cut.
The tax take for the year was 2.5 billion euros (1.7 billion pounds) higher than forecast, the finance department said on Tuesday, almost 1 billion higher than in September and ahead of the 2.3 billion euro surplus estimated for the full year just last month.
While more tax was collected than had been expected in most areas, corporation tax accounted for over 2 billion euros of the outperformance, which the finance department primarily put down to improved trading and some timing factors.
Corporate taxes, which Ireland draws from its large cluster of multinational companies such as Apple and Google, represented over 13 percent of the entire tax take at the end of October compared to 11 percent for the whole of 2014.
Government spending in the first 10 months was 0.4 percent or just over 100 million euros lower than expected, leaving a budget deficit of 2.18 billion euros at the end of October versus an 8.5 billion shortfall at the same point last year.
If one-off items are excluded, such as the sale of state-owned bank shares, the deficit would have come in at around 4.5 billion euros, the finance department said.
The government said last month that even after using most of the tax windfall for the year on additional spending - against the advice of Ireland’s central bank - its budget deficit for 2015 would fall to 2.1 percent of gross domestic product (GDP).
October’s tax take suggests the deficit may fall below 2 percent by the end of the year, well ahead of the EU’s 3 percent year-end limit. However the central bank governor has warned against basing future policy on tax gains - such as the recent surge in corporate tax - that could quickly disappear.
Reporting by Padraic Halpin; Editing by Ruth Pitchford