Tax revenue was below profile by just 1.2 per cent (€141 million) to end-quarter one 2018, contributed to by some small shortfalls across a number of headings. Furthermore, tax revenues to end-March are showing strong year-on-year growth of 3.5 per cent or €401 million.
It is important to point out that it is still too early in the tax collection calendar to discern any firm trends, which in turn underpins the decision to leave this year tax forecast unchanged from Budget 2018 in the Stability Programme Update, which was published last month.
By way of contrast, last year at end-quarter one exchequer tax revenues were 2.4 per cent (€282 million) behind profile, while by end-December 2017 overall tax revenues came in slightly ahead of profile by 0.2 per cent or €116 million.
As part of the continuous efforts to improve the Department’s tax forecasting performance, last year the ESRI and my Department jointly examined the sensitivity of income tax and USC revenues to changes in income. As a result of this work my Department revised the income tax and USC revenue elasticities used in the forecasting process. These new elasticities were used in the forecasts for Budget 2018. At end-March 2018 overall USC receipts closed the quarter on profile, while the 1.7 per cent (€80 million) shortfall in income tax can be attributed to small under-performances in unearned and self-employed income tax revenues.