Bernard J. Durkan
Question:118 Mr. Durkan asked the Minister for Finance the extent to which tax revenue for 2003 to date differs in any way from previous years; and if he will make a statement on the matter. [5402/03]
Other Questions. - Tax Revenue.
Tax receipts received by the Exchequer to the end of January 2003 totalled €2,808 million, an increase of 10.3% on the €2,545 million received in the same month in 2002. As regards the performance of the more significant tax heads, income tax receipts in January at €712 million were 10.4% down on the €795 million received in the same period last year. Corporation tax was down 5.5% on the same period last year. On the other hand, VAT was up 30.4% on last year's figures with receipts of €1,507 million compared to €1,156 million in January 2002. Excise duties also increased by 1.6% compared to January 2002.
The January figures for any year are not necessarily a reliable indicator of a trend for the year as a whole. No reliable predictions can be based on one month's figures. For example, total tax receipts in January 2002 showed a fall of 5.7% on the same month in 2001, while receipts for 2002 as a whole were almost 5% higher than in 2001.
I advert to income tax and corporation tax. The Minister rightly quoted the fig ures in his reply. He published his expected profile for revenue under these taxes for the first time this year and significantly, the returns in January fell well short of what his officials predicted. What is his assessment of that finding? Does it indicate that the trend of collapse in income tax receipts, which has been a feature of the past two years and which has substantially been put down to factors such as the SSIAs and reductions in bonuses and overtime, is continuing? Has he over estimated income tax receipts again this year? Does he anticipate the need to take corrective measures?
As the Deputy will appreciate, it is dangerous to extrapolate from one month's figures on the likely outturn of income or expenditure. We will have to wait for a number of months to elapse before a reliable estimate can be made as to what the position will be for the entire year. It would be foolish to make an estimate based on the first month. However, it is something we are keeping under review. If one had compared January 2002 to January 2001 one would have arrived at a totally false outturn for 2002.
Income tax receipts have been disappointing for almost two years. Furthermore, corporation tax receipts for 2002 were less than had been anticipated and the Deputy will have noticed that the graph of tax receipts has been heading steadily downwards in the US and other European countries for a considerable time and they have been far below the expectations and tax profiles of those countries. The Deputy will appreciate that making an extrapolation from one month's figure is not a reliable method going forward. However, we will keep a close eye on tax receipts.
What are the reasons for the lower income tax receipts, apart from similar trends in other countries? Is the reduction linked to domestic economic growth or other factors?
Economic growth is the key determinant of taxation receipts. We will have more reliable figures to estimate GNP for 2003 later in the year. The Central Statistics Office makes changes to the figures as the year progresses but economic growth is the main factor in taxation receipts.