Pat McArdle, Chief Economist of Ulster Bank commented:
October was another weak month with tax receipts undershooting the Dept of Finance profile by 140 million, albeit that this was significantly less than the undershoots of the two previous months, 257 million and 218 million, respectively.
Property taxes were again the source of the weakness stamp duties were down 71 million, and CGT down 42 million. However, the stamps shortfall was the lowest in five months and value added tax, which was quite weak in both August and September, actually exceeded the target by 32 million. Oct was, thus, a mixed picture weak but not as weak as some of us expected. This experience was in line with the Department of Finance guidance at the end-Sept Press Conference that the shortfall for the year might be slightly below 1 billion and slightly at odds with the views of outside commentators, ourselves included, that the shortfall might be higher. With ten months gone, the cumulative shortfall is 630 million.
Having said that, everything still hinges on November when 11 billion, or 22% of the yearly tax take, is due. Half of all CGT and Corporation tax is paid in November so a few hundred million could easily get lost. October was less weak than expected, if that trend continues, the Departments forecast will be close to the mark. If there is renewed weakness, the Dept will be too conservative. We will stick to our guns and say that the shortfall will be closer to 1.25 billion than 1 billion.
The other strange thing about the Oct returns was the surge in income tax receipts they overshot by 300 million, bringing the cumulative excess to 240 million. All categories of income tax seem to be doing well and it has been a fairly consistent outperformer all year. No sign here of any significant job losses, au contraire.
On the other hand, corporation tax, which had been doing well, had a weak month it undershot by 250 million, reducing the cumulative surplus for the ten months to 43 million. Again, much will depend on whether or not this trend continues in Nov when the big payments are made.
On the spending side, things are falling into place, pretty much as the Department said they would. Current spending is 63 million below target little changed from a month ago while capital is now only 230 million over target. Two months ago, capital was almost 500 million over. It looks like both current and capital spending will end the year close to target.
The November Exchequer returns will be released on 4 December, just one day before the Budget. It promises to be exciting, both for commentators and the Department alike.
