Okay, you can probably dismiss any pronouncement from the Department of Finance as spin with a soupcon of simulation and dissimulation. But at least the national media should have been able to tease apart the strings of numbers in yesterday’s Exchequer Statement and conclude that instead of taxes being up and the deficit falling, that we are now seriously off plan for the year with taxes DOWN on plan and the position deteriorating and costs UP on plan though the mess is being masked by the Government cutting back on capital spend. And “capital spend” might sound vague, but this is OUR money which we have given the Government in taxes which the Government promised to give BACK TO US with spending on projects in the economy, spending which would generate economic activity, reduce unemployment and improve our infrastructure and competitiveness.
Take a look at the Exchequer Statements for the last three months:
To the end of August 2012, we had collected €22.1bn in taxes which was €365m ahead of plan. Excellent. Except there was a late receipt of €250m in corporation tax which arrived in early January 2012 and has been regarded as rightly belonging to 2011 rather than 2012, though as the year has progressed, it seems this is being downplayed by the Department of Finance. But even so, taxes ahead by €365m or €115m when you deduct the €250m corporation tax idiosyncrasy is still positive.
However, by the end of October 2012, we had collected €28.35bn which was just €96m ahead of plan and once you deduct the €250m idiosyncrasy we are actually behind plan to the tune of €154m. This represents a marked deterioration from August 2012.
On the spending side, to the end of August 2012 we had spent €29.6bn which was €317m ahead of plan due to nasty Minister James Reilly and his failure to deliver reforms to health and nice Minister Burton whose social welfare budget is blown by worse than expected needs.
There are two components of spending – current and capital. Current is what we spend week-in, week-out on salaries and other short-term benefits. Capital is what we spend on developing our national infrastructure – roads, hospitals, prisons, schools but also energy, communications and recreation. The current component of spending at the end of August 2012 was €28bn which was a stonking €437m ahead of budget. But we were underspending on capital to the tune of €100m. So it was bad even in August 2012.
But take a look at October’s Exchequer Statement.
Total expenditure stands at €36.7bn which is just €88m ahead of budget, but within that current expenditure is €424m ahead of plan, marginally better than the €437m overshoot in August year-to-date. But capital spending is now down an incredible €336m from plan.
Overall in August 2012, we were €202m worse than plan when you considered taxes and expenditure together and excluded the €250m idiosyncrasy. At the end of October 2012, we are €242m worse than plan, which represents a slight deterioration, but when you consider that it is the Government cutting the capital programme which is stopping the figures being worse, you are entitled to feel concerned and angry. We have had to give Roisin Shortall a €33,100 severance payment after SHE resigned from her junior ministerial post and the Government makes up this overspend by cutting the capital programme which would generate economic activity in the real economy – it is infuriating. If the Government was spending the capital budget to plan, then, overall at the end of October 2012 and excluding the €250m idiosyncrasy, we would be €576m off plan – this is getting serious.
We know from Department of Finance and NAMA projections that €1bn of capital spend equates to 10-17,500 new jobs in the economy. So €336m would equate to 3,000-5,000 new jobs. Remember this is OUR money and also remember that the overspend on current spending is down, in a large part, to Minister James Reilly’s failings to deliver reforms to the health budget.
Reblogged this on Machholz's Blog and commented:
And yet we have Kenny and Noonan with Gilmore trying to tell us we don’t need a second bailout ! What planate are these gobshi** living on .Oh Yes! There living in Ba-NAMA-land =Bankers paradise where all their losses will be paid by the local surfs!
I am a big fan of your blog.
All in all, are you not over egging the pudding. The situation has deterioted over the last two months, but all in all, as a percentage of total revenues you are talking about a varience of less than 2% against plan. And that us AFTER you exclude the €250m you speak of. I think it should be included anyway. The National Accounts are as I understand it prepared on a cash receipts basis, and not an accruals basis. The money came in THIS year. Got it?
Chill
NWL,
It is always worth digging a little into the Exchequer figures but the slant you give for the €251 million of 2011 CT receipts received in January 2012 is wrong. The “profile” was revised in May 2012 to take account of this and other issues. It is available here
At the time of the Budget it was forecast that €35.8 billion would be collected in tax revenue. When the revised profile was released the forecast was increased to €36.4 billion. The €0.6 billion increase was due to the CT issue and also the reclassification of some PRSI contributions as Income Tax.
I would have some issues with the revised profile but it definitely does account for the CT “idiosyncrasy” that led to a delay in some in December 2011 receipts.
@ Seamus The revised profile also adjusted the Income Tax figure because of the mess made in the allocation of PAYE/PRSI. However the October 2012 CT figure at €2667M is in fact lower than the amount paid at this stage last year (€2476M) when the January discrepancy is taken into account.
While the fall in the October payments is probably down to just one large multi-national pharma group with a 30th November year end, the general weakness in all taxes suggest we are back in recession.
Income Tax and PRSI when taken together are just about at last year’s level. This is despite quite a serious level of job creation in certain parts of the economy. However the reductions in areas such as the Public Sector, retail, distribution and construction are leading to no increase in the tax yield.