The latest Exchequer Returns for October shows a budget deficit (general government items only) of €3.9bn, €925m better than expectations. A strong month for the Irish Exchequer means that tax revenue is now in line with expectations despite trailing all year.
The figures indicate that with just two months of exchequer returns left to record in 2017, it now looks likely that the Government will achieve their updated budget deficit estimate of 0.3%, as outlined in last month’s Budget.
October saw an impressive turnaround in tax revenue. A shortfall relative to targets of €212m, which existed to September, has now been cleared with recorded tax revenue of €3,769m, €218m (+6%) ahead of expectations.
The increase in tax revenue was broad based with income tax (+€35m), corporation tax (+€47m) and excise duties (+€49m) all exceeding expectations in October. Income tax, which accounts for 40% of total tax revenue, is currently €154m behind expectations in the year to date (1%) but is growing strongly.
Voted spending remains 0.8% below expectations in the year to date (+4.5% yoy). Within this, current voted spending is up by 3.8% yoy, with voted capital spending up by 15.8% yoy.
According to Goodbody Stockbrokers, "Over 80% of the yoy increase in capital expenditure is driven by the Department of Housing, Planning, Community and Local Government as the government attempts to grapple with the housing crisis. Overall expenditure is €375m below expectations. The surge in tax revenue in October is welcome for the government as it looks to achieve a budget deficit of 0.3% in 2017."