Róisín Shortall
Question:106. Deputy Róisín Shortall asked the Minister for Finance the reason for the reduced income tax receipts in the past two quarters in view of the increased numbers of persons in employment. [22380/17]
View answerWednesday, 10 May 2017
Questions (106)
Written answers
The position is that income tax receipts have performed steadily in the last two consecutive quarters, recording annual growth of 5.1% (€301 million) and 1.4% (€62 million) respectively. The following tables set out the income tax year-on-year performance in the last two quarters:
|
End-quarter 4 2016 |
End quarter 4 2015 |
Y-on-Y Change |
Y-on-Y Change % |
|
|
Income Tax |
€6,216 |
€5,915 |
+ €301 million |
+ 5.1% |
|
End-quarter 1 2017 |
End-quarter 1 2016 |
Y-on-Y Change |
Y-on-Y Change % |
|
|
Income Tax |
€4,417 |
€4,355 |
+ €62 million |
+ 1.4% |
However, I assume the Deputy is referring to the income tax performance against target. Revenues under this heading were solid in 2016, with €19,169 million received, finishing the year 0.9 per cent (€174 million) above target. This represented a strong year-on-year increase of 4.4 per cent (€810 million).
In relation to the first quarter of 2017, the position is that income tax has performed steadily with annual growth of 1.4 per cent or €62 million recorded in the year-to-end-March. However, income tax receipts of €4,417 million were 3.9 per cent below profile. The shortfall against target is attributable across a range of income tax components contained within the overall heading.
It is important to point out that income tax encompasses a broad range of elements, some of which are not directly impacted by employment or wage developments. These include Deposit Interest Retention Tax, Life Assurance Exit Tax, Dividend Withholding Tax, Professional Services Withholding Tax and Back Duty. These payments can be 'lumpy' in nature and the timing of payments can vary from year to year. I am informed by the Revenue Commissioners that the majority of these specific components are having a drag on overall income tax receipts in the first quarter of 2017.
In relation to PAYE, the most significant component of overall income tax, closed quarter 1 of 2017, broadly in line with profile down just 2% (€49 million), but up 6% (€187 million) in year-on-year terms.
However, the PAYE component of USC came in 7% (€63 million) below Revenue profile, which represents a year-on-year decrease of 12 per cent (€107 million). The Deputy will appreciate that a reduction in USC was expected in 2017 given the measures I introduced in Budget 2017. In addition, it is important to point out that in the last three budgets, I have introduced income tax measures with a full year cost of c. €2.2 billion, of which €1.8 billion related to USC changes, which were designed to encourage and reward work. These will naturally impact upon the annual growth rate of USC receipts.
Notwithstanding this, the performance of USC is lower than expected and the Revenue Commissioners, along with officials from my Department, are examining the matter.
Furthermore, it should be noted that a similar position pertained at the end of the first quarter in 2016 – income tax was up 2.7% (€114 million) year–on-year, but down 3.4% (€153 million versus profile). However, due to a pick-up in receipts throughout the remainder of year, income tax finished 2016 ahead of target.