Tax revenue returned to growth in 2011 for the first time since 2007 and excluding some technical adjustments that have positively impacted on tax revenues, taxes are up an estimated €758 million (10.1%) year-on-year and are €351 million (4.4%) ahead of profile in the first quarter of 2012. It is encouraging to see that income tax is running marginally ahead of profile. The tax figures for Quarter 1 2012 show a good start to the year and highlight the robust nature of the Budget 2012 tax forecasts. A number of new measures were introduced in Budget 2012 including the VAT measures and the removal of over 330,000 from the charge to the USC. Given these policy changes and the continued economic uncertainty, the solid performance of VAT and Income Tax is welcome, particularly when no income tax increases were introduced in Budget 2012.
As regards possible explanations for income tax running ahead of profile, the latest available employment data from the Quarterly National Household Survey relating to Q4 2011 showed that employment increased marginally between Q3 2011 and Q4 2011 — the first time a quarterly increase in employment was observed since 2007. While this is encouraging, it is too early to draw conclusions and I will wait on further data to inform my views regarding developments in the labour market. Furthermore, the latest earnings data, also relating to Q4 2011, showed that weekly earnings fell by 1½% year-on-year.
While there are signs of improvement in the labour market, we are all too aware that there is a long way to go to reduce our unacceptably high unemployment rate and provide jobs for our people. The Jobs Initiative and subsequent Action Plan for Jobs demonstrate this Government's commitment to our goal of delivering sustainable employment growth.
