DUBLIN (Reuters) - Ireland fell 0.5 percent behind its revenue goal for 2012 at the end of November, with weak corporation and income tax receipts making sober reading for the government on the eve of another austerity budget.
Ireland, bailed out by Europe and the International Monetary Fund two years ago, will unveil its sixth budget since late 2008 on Wednesday and test its slowly growing economy with another 3.5 billion euros of tax hikes and spending cuts.
While the disappointing figures were flagged on Saturday when the country’s finance department said it would miss its tax target for the year, analysts said the detail provided on Tuesday would have implications for the year ahead.
“The figures for November continue the October trend of failing to meet the targeted tax take. Worryingly, income tax for the hugely important month of November are 12 percent behind target,” said Peter Vale, tax partner at Grant Thornton.
November is traditionally the busiest month of the tax year, with about 30 percent of the year’s corporate tax and 15 percent of income tax collected.
“Clearly this will impact on projections for tax receipts in 2013 and what tax raising measures are required in the Budget tomorrow,” Vale added. “To ignore the November figures risks creating the requirement for an even bigger adjustment this time next year.”
Dublin will nevertheless stick to its planned adjustment target for 2013 after estimating that buoyant non-tax related revenues - including the 855 million euros raised through the auction of fourth-generation mobile phone licences - would trim this year’s budget deficit by more than expected.
Dublin had, however, been able to point to a better-than-expected tax take in the first 10 months of the year as proof of progress under the two-year old bailout.
Income tax receipts were particularly worrying, falling 231 million euros or 1.6 percent off target at end-November, having been marginally better than expected in October. Corporate tax was 21 million euros or 0.5 percent lower than had been hoped.
Finance minister Michael Noonan has pledged not to increase income tax any further in Wednesday’s budget and will look to raise much of the 1 billion euros needed in new measures by reintroducing a tax on property.
Government departments also continued to fail to control their spending, with the two largest - social protection and health - pushing current expenditure 1.7 percent above target.
Ministers have sought to offset this by spending 14 percent less of their allocated capital budgets, meaning overall government spending was 0.6 percent above target.
Ireland’s budget deficit fell to 13 billion euros from 21.4 billion euros a year ago, mainly due to the state recapitalisations of lenders last year and the rescheduling of other bank-related payments earlier this year.
Reporting by Padraic Halpin; Editing by Catherine Evans