Dáil Éireann Debate, Tuesday - 23 March 2004
4 Ms Burton asked the Minister for Finance the main features of the Exchequer returns for the first two months of 2004; the way in which spending for the first two months compares with the projected levels; if he intends to review any of the budgetary targets for 2004 in view of these returns; and if he will make a statement on the matter. [9067/04]
View answerThe Exchequer balance for the first two months of 2004 showed a surplus of €430 million compared with a budgeted deficit of €2.806 billion for 2004 as a whole. Total tax receipts for the first two months of 2004 were €5.354 billion, which was €307 million or 6.1% above profile.
While tax revenue results for the first two months have been encouraging, it is much too early at this stage to draw any conclusions from these figures for the outturn for the year as a whole. The excess in receipts over the profile target is largely accounted for by capital gains tax receipts which are running €200 million ahead of profile. Capital gains tax receipts continued to show the unexpected buoyancy seen in the latter part of 2003. However, this good performance is not expected to continue and it is anticipated that there will be a slow down in CGT receipts relative to 2003 by the end of 2004.
More significantly, it should be noted that the taxes which generate the most significant share of revenues, such as income tax, excise and VAT receipts, were slightly below profile for the period to the end of February. On net voted spending on services, the projected increase for 2004 as set out in the 2004 Revised Estimates, REV, is 7%. At the end of February, net voted spending was 1% higher than in the same period last year and was €360 million less than expected on the basis of the published spending profile. The Departments most significantly under profile to the end of February were Education and Science; Environment, Heritage and Local Government and Transport. Departments overall do not project any excesses or savings on the spending totals in the REV. As the Deputy will be aware, assessments of the overall budget performance for the year issue at the end of each quarter.
There has been a considerable overshoot in the figures for the first two months. For the reasons set out by the Minister, revenues have been more buoyant and spending has been kept very tight. In view of this, does the Minister agree it is appropriate that he revisit certain notorious features of his December budget when, presumably, he made decisions on the basis of the Department of Finance's expectations? In particular, the Minister made some very mean cutbacks in social welfare payments.
The Deputy is going outside the remit of the question. A general question is acceptable. I suggest the Deputy put a question to the appropriate Minister
The Minister answered with regard to specific Departments. Widows are suffering a €6 million cutback. I do not know if the Minister had a good week——
A general question may be put but it is not appropriate to go into detail.
The Minister is undershooting his expected expenditure figures, particularly in three areas where significant cuts have been made and there has been an underspend, as the Minister has said. Is all discussion and questioning in the House to be closed down? The Minister has been allowed to answer specific points but I am not allowed to ask specific questions.
The Chair is obliged to implement the Standing Order.
The Minister obviously had a good week in Cheltenham. Will he rethink the measure regarding widows? Does he agree that the overall information disclosed by the figures shows that capital spending on infrastructure is significantly below the projected figures? This applies to roads, railways and the vital infrastructure which is a major factor in hindering Ireland's future economic growth?
Our universities are in rag order because of the cutbacks in day-to-day spending which have been imposed on them. The Minister has said the Department of Education and Science is below its spending profile. When figures show a different outturn from the expectation set out in the budget should a prudent Minister for Finance not move to revise spending targets so as to achieve the education goals of the national development plan and show mercy to the widows of Ireland who are suffering a €6 cut?
It would not be a prudent Minister for Finance who would base his spending on the figures for six or eight weeks into the financial year. It is much too early to be definitive as to the outturn for 2004. I have explained the position on the revenue side. The increased buoyancy at the end of February mostly relates to the figures from capital gains tax. The figures for the other taxes, such as income tax and VAT, are a little less than profiled but even if they were more than profiled it would be much too early to make a definitive call at this stage.
I am sure the Deputy is aware of the reasons for the rise in capital gains tax revenue. It is the changed dates of payments. Furthermore, it is difficult to predict what capital gains tax receipts will be. They are mostly received on 31 October but a recent change introduced two payment dates so that some are received on 31 January. Besides, capital gains tax mostly relates to one-off transactions.
With regard to year to year spending, in recent years incorrect comment has been made by people both inside and outside this House with regard to basing spending forecasts on the first three, or even six, months of the year. This arises from a lack of knowledge of how the public finances are put together. Consequently, I decided to publish multi-profiles of expenditure for 2003. This gives some idea as to how wrong calculations can be made, and many eminent commentators outside the House made them in 2002. In 1999 to the end of February, the year on year spending increase was 5% below the previous year but the outturn for the year was 11.9%. In 2001, the year on year spending at the end of February was up 25.5% but the full year increase was only 23%. In 2002, the year on year increase to the end of February was 22.4% but the outturn was only 14%. In 2003, the year on year increase to the end of February was 16.7%, yet the outturn for the year was only 6.7%, as budgeted. In 2004, the year on year figure to the end of February is 0.9% but the estimated full year increase is 7.2%.
