Vol. 552 No. 3
107 Mr. Durkan asked the Minister for Finance the likely budgetary position on 31 December 2002 based on the current budget and projected outturns at the end of 2002; if the position is likely to be in surplus or in deficit; and if he will make a statement on the matter. [12569/02]
At budget time, the forecast for the 2002 Exchequer balance was for a surplus of €170 million. This estimate remains unchanged. Forecasts for the public finances are predicated on the level of activity in the economy. On budget day, an increase of 3.9% in gross domestic product in 2002 was forecast. Nothing which has occurred so far would lead me to change this view, which I feel is reasonable given the current economic climate.
The end March Exchequer returns showed a surplus of €608 million during the first quarter of 2002. This compares to a surplus of €1,457 million for the same period in 2001 and, as I have already mentioned, a surplus of €170 million budgeted for 2002 as a whole. The increase in tax receipts in 2002 over 2001 was forecast at budget time to be 8.6%. The end March Exchequer returns showed tax receipts in the first quarter at €6,217 million, which is 20.5% of the budget day target. Year on year tax receipts, in the first quarter of this year, were 2.8% lower than the first quarter of 2001. However, it is important that this should be considered in the context of the budget day changes which will boost tax receipts later in the year. The standard rate of VAT will increase from 20% to 21% in March of this year and the impact of this increase should be evident from the May receipts onwards. The change in the corporation tax payment dates, which is estimated to yield almost €800 million this year, will increase receipts from June onwards.
As with tax receipts, it is difficult to draw conclusions for the year from one quarter's expenditure. Net voted spending in the first quarter was €6,102 million compared to €5,210 million in 2001, an increase of 17.1%. This compares to a figure of 14.4% in the Revised Estimates volume published recently. The rate of increase year on year dropped from 22.1% at end January to 17.1% at end March. Year on year spending can, however, vary from month to month influenced by both spending trends in the base year of 2001 as well as in the current year.
The general expectation is that the economy is recovering and that this should be reflected in tax revenues during the remainder of the year. Spending plans by Departments are being closely monitored to ensure that these come in on target. The overall end year Exchequer position is, therefore, still as forecast on budget day.
108 Mr. Durkan asked the Minister for Finance if trends have been established regarding receipts from the various forms of taxation in 2002; if it is possible to forecast the end of year situation and any likely budgetary changes; and if he will make a statement on the matter. [12570/02]
Receipts to end March were 2.8% lower than in the same period last year, compared with a budget target of an increase of 8.6% for all of 2002 over 2001. This result should be viewed in the context of the 2002 budget day changes which will boost tax receipts later in the year. The increase in the standard rate of VAT, which took effect from 1 March 2002, will be evident in the receipts from May. The change in the payment dates for corporation tax, which is estimated to yield almost €800 million this year, will increase receipts from June 2002 onwards.
Tax receipts for the early months of the year may not reliably predict the outcome for the year as a whole. The period under review is too short. The position is further complicated in 2002 as the Easter break occurred at the end of the quarter and therefore affected year on year comparisons. The general expectation is that the economy is recovering and that this should be reflected in tax revenues over the remainder of the year. The overall end year Exchequer position is, therefore, still as forecast on budget day.
