An Saoi: Well, the end of year Exchequer Figures have arrived and are far better, or should I say are less worse, than was expected. The figures are well below those projected in April, yet curiously €500M above the projection made much more recently in the pre-budget White Paper. The total is above my own projections, which leaves me with a degree of egg on my face.
As I pointed out in my commentary on the November figures, VAT remains particularly weak, some 6.6% below the April target. Income Tax also continues to weaken further. As this weakness has continued into December, I presume that the PAYE returns must be particularly poor, reflecting the continued trend in falling employment numbers and pay reductions. It is hard to see any improvement from either source in 2010, despite suggestions of a pick-up in sentiment towards the middle of the year. My own figures, while slightly below the outturn, were respectable.
Holding two Budgets annually clearly is good for Excise returns, and it is here my I met my Waterloo. Premature withdrawal of product from bond by wholesalers presuming budget increases backfired on them and on me, but artificially increased payments to the State. There is likely to be a reversal in the first few months of 2010, unless of course there is a boom in car sales as VRT is accounted for under this heading.
The last minute flurry of Capital Gains Tax took me, and the Deptartment of Finance, by surprise. The final outcome is nearly 40% over their White Paper figure. I am as surprised as they are, and have been wracking my brains for the disposal(s) which could explain the yield.
Corporation Tax figures are also respectable, and as I noted in last month’s commentary all the more so considering the number and amounts of repayments. I hesitate to use the term fairy godmothers again - however there is someone out there with a US twang looking after the Department of Finance.
In relation to CAT, I slightly over-estimated the yield but was considerably below the Stamp Duty outturn, but then again so did the Department of Finance in the White Paper. It has come in almost at the original April estimate. Could the forthcoming introduction of E-Stamping by the Revenue Commissioners perhaps have forced many solicitors to bring their affairs up to date? Customs Duties are 9% below the April target, and continue to reflect weak consumer spending and a lack of investment in capital goods sourced from outside the EU.
Conclusion: The tax figures and other recent reports from the CSO confirm our total dependence on multi-nationals and the Public Sector, both commercial and otherwise, for employment and taxes. The private indigenous sector continues to perform poorly. The need to repair personal balance sheets, and in particular to clear at least some of their personal debts, is going to leave the public circumspect in their spending habits. Public Servants in particular are receiving their first payslips of the year this week, and are unlikely to be rushing out to spend, knowing that further pay cuts are likely. The only road-sign visible indicates a cul-de-sac rather than a corner.
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