Exchequer Returns for April

Some good news. The exchequer returns for the end of April are essentially in line with the targets set out in the budget: The Exchequer Statement is here and the analysis of tax returns is here.

I wonder, however, whether evidence of sticking with our plan is quite enough right now to convince skeptical international markets that we can stabilise our fiscal situation. The yield on ten-year Irish government bonds moved out to almost 5.6% today, with the spread over Bunds reaching a new high of 2.7 percentage points. I think the next few weeks would be a good time to start to provide more clarity about the likely composition of this year’s budget, with indications about whether a property tax is likely, about the nature of the “universal social contribution” as well as the nature of further spending cuts.

36 replies on “Exchequer Returns for April”

Definitely good news we are on target and the drop in tax take on last year is falling.

Agree though we need to start discussing the next budget. What are we looking for – another €3-4b? It is not going to come from hitting PS pay and social welfare. A big element has to be higher taxation. I suppose we are hoping some of it will come from income growth. If that was 3% then that would bring in €1.5b or thereabouts. Then cut in expenditure of €1.5b say and €1b in property tax. Might as well bite the bullet on this one and reform stamp duty while not a lot is going on.

That’s my budget for now (invoice is in the post). A lot depends on if we start seeing growth mid way through the second half.

@Stuart: “It is not going to come from hitting PS pay and social welfare. A big element has to be higher taxation.”

Not according to Lenihan: according to a Reuter’s interview on irishtimes.com, ‘Mr Lenihan said the bulk of the adjustment needed in December’s budget for 2011 would be found through cuts in expenditure.

“There may be some scope for limited taxation but the bulk of it will be on day-to-day expenditure. We had to face up to €3 billion (worth of cuts) last year and we did it, so €2 billion is less of a challenge,” he said.’

He also said that there’s no risk of contagion from Greece to Ireland…

Mr Lenihan of flat marginal budget cuts curve – all cuts are equally easy and their rank order is entirely arbitrary. lucky old him

A property tax requires a database. Any news on this?

In Jane Suiter’s recent research, she notes that the Dept of Education does not have a database on the condition of primary schools. Ministerial power and patronage basically trumping need in many cases – and all ministers with budgets giving the nod to the Finance Minister’s back yard.

From recent experience of the speed of light at which this administration makes decisions I think I will have to check out the odds on PaddyPower.com on the logistics being ready in time, and bet against it being ready on time by the X-‘men of no property’. I’ve already placed an old penny at 10,000/1 on a land tax being implemented in the next five years – doubt I’ll need to dig out the ready-reckoner to figure out me winnings

Interesting comment from the Chair of NAMA today on Planning – which of course links to local authority funding – which added to the splurge as the then x-men of a little property abolished rates back in 1977/8.

Yes – now that the sheeply shoppers are well bought – be good to get some sense of the structure of the next budget – as ECommission ( being nice to us recently) will upgrade the deficit to 20+% – which is yet another story …

I would also like to see the travel tax INTO Ireland abolished: Blind Biddy is stuck in New York and, on a point of principle, has no notion of returing and paying a Tenner to the Minister who has already taken nearly a Tenner from her Blind pension in her previous ministerial position.

@Skepsis
In my budget the increase in income tax comes from increased activity – no new income taxes as such. I think they should work on property tax while the property market is quiet.

Then do the cuts – I will be interested to see where Brian Lenihan thinks they should come from. I know what I would do.

This whole do-wacky is slowly turning into a poker game of the goverments of the pigs and their european ‘masters’.

We wonder what will be thrown into the pot next- old age pensioners, medical patients, tax revenues that leave the jurisduction…..

Surely it is better to fold our had now rather than up the ante over the next two to three years.

Guaranteed though, none of the actual card players will walk away from the game shirtless….

Forget the spin. The public finances are STILL in a mess. There is a massive deficit. There is a huge outflow of young people in search of employment. These are now the young forgotten Irish. The rate of outmigration has really picked up in the last two months. Ask managers of club teams throughout the country. Of course this benefits the exchequer. No mention of this from government cheerleaders and stockbroker apologists.
The country is being taxed into the ground. Small business has been hammered into oblivion by this government. It is a case of tax tax tax. Where is there a meaningful strategy to develop small business? Large areas of the country are employment wastelands.
No long term solution to the public finance problem is possible without a major development of small enterprises? Just look at the stupid carbon tax? This is another nail in the coffin from a government that pays lip service to enterprise.
Yet billions are pumped into a zombie bank. It is a sad reflection on us as a nation if we can feel happy about these figures. They make sorry reading. Behind them lies a tale of emigration and the destruction of businesses.
Lets get back to reality. Sadly we now have cart before the horse economics.

Growth? GROWTH?!

LOL! HAHAAAHAAAHAAAAA!

This is a serious economics blog, please leave your tasteless jokes at the metaphorical door! Where do we see this growth coming from? What demand is growing? Exit stamps on passports? Abolished. I have already suggested increasing passport fees etc to 1,000 euro. Any ideas on how growth is arriving? Perhaps we can tax that, too?

Wishful thinking has strangely never been taxed. I believe we must start on this blog. Any mention of “growth” without details of how etc., should attract a demand for 1 euro wishful tax donated to the holy originators who will try to get us an editor to remove the sp. mistakes.

“Stuart Blythman Says:
May 5th, 2010 at 10:03 pm

Definitely good news we are on target and the drop in tax take on last year is falling.”

Does this mean that the deficit is growing? STILL!?

John F

Sorry, but we are not at home to cynics, who try to damage Ireland Inc with their endless bad news. Shame on you!

This is a serious economics blog.

George

You too! If you cannot be positive, +ve, then say nothing! Why people will think we cannot govern ourselves. Kevin Bloody Myers will be popping up next!

@KW – “more clarity about the likely composition of this year’s budget”

I agree that this would be a good pre-emptive move… but fear that politics will always trump common sense. I’m sure Mr L would rather gargle battery acid than show his hand too early.

How about a simple recognition that the arithmetic is still daunting even for the Paragons of the Periphery? Expenditure of 50bn, revenues of 30bn, even with all the ‘good work’ we have done? Asking for a bit more clarity might come to be seen as a bit of a timid ask. How about a June budget? Or would that risk being seen to act with decisisiveness, even pre-emptively? It might, heaven forfend, smack of having a plan.

@Joseph
I think it is about time this country displayed some economic maturity and put its financial security before party politics.

@ simpleton “Expenditure of 50bn, revenues of 30bn”

This is something that has always mystified me about the exchequer statements. They dont seem to include PRSI and the health (wealth) levy on the revenue side. Is this netted off against expendiure, ie it is more accurate to say we have expenditure of 70bn and revenue of 50bn?

@dreaded_estate – “I think it is about time this country displayed some economic maturity and put its financial security before party politics.”

I sincerely wish they would. I am not holding my breath though. Perhaps I’m sounding cynical but it’s only a result of observing what politicians say and what politicians do over many years that’s caused it.

Kevin,

If memory serves me, PRSI etc are recorded as a contra against spending under the term “appropriations in aid.” If you were to view them as just a form of payroll tax, you would have a point.

What would that do to the argument that spending as a percentage of GDP/GNP is quite low in an EU context? Bear in mind that some part of health, education and pensions are privately funded and we do not have a large standing army.

From the IT … a clear sign the economy is on the up, Minister for Culture, Sport and Tourism Mary Hanafin said today.

And she would know – being an expert in the field.

@ D_E

perhaps you would expand on your erudite and profound statement.

@tull mcadoo
“What would that do to the argument that spending as a percentage of GDP/GNP is quite low in an EU context? Bear in mind that some part of health, education and pensions are privately funded and we do not have a large standing army”

After gross up spending and revenue for PRIS.
Spending was 51.4% of GNP in 2009 and will probably be higher in 2010.

What do you want me to expand on?

The April figures are not important enough to base any firm conclusions on patterns in tax revenues. April generally only makes up about 5% of the annual tax take. However, <a href=”http://economic-incentives.blogspot.com/2010/05/tax-revenue-rises.html”tax revenue in April was 11.5% up on revenue in the same month last year.

All taxes except CGT were up on last year, however most of the €182 million increase can be attributed to VAT and Corporation Tax. As April should not be an important month for these taxes it suggests that timing and noise has a lot to do with the increase. Still, the small increases seen in Income Tax and Excise Duties are positive but not enough to suggest a corner is being turned.

@Pat
It is still good news. As Seamus points out above April tax take was €182m up on April 2009. It may be a once off but we haven’t seen the like for a couple of years.

I work in the commercial world, I’ve been through 2 recessions in that time (not counting this one). You look for signs and any sort of growth on last year is to be welcomed.

As for Growth, there is still money out there. As property costs come down (value and rents) people decide to jump in. Other costs are now down also and the price of doing business in Ireland has definitely dropped. Pay expectations are lower too. Sterling is strengthening (though a hung parliament might undo that).

By no means are we out of the woods yet and this latest crisis could undo everything but when you have been in business over the past couple of years any sign of life is to be welcomed. Time will tell if it was just a break in the cloud of ash.

@ Stuart Blythman

You can portray these figures as economic stabilisation and recovery but this “recovery” will be achieved while exporting a generation. That is tacit government policy.

Tax receipts are still down 10.8% year-on-year.

@ D-E

Do we agree that we have a spending problem more so than a taxation problem?

@Graham
“You can portray these figures as economic stabilisation and recovery but this “recovery” will be achieved while exporting a generation. That is tacit government policy.”

And that’s the way it has been since the foundation of the state except in the past 10 years. The question is “Can the Irish economy produce enough jobs so this doesn’t have to happen?”. I left school in 1981, college in 1985 and qualified as an accountant in 1988. At every stage a big proportion of my peers emigrated.

We’ve tried FDI with reasonable success but then Ireland got too expensive, we’ve tried a property bubble approach which we all know was disastrous. Now we’re going for the Smart economy – which to me is all a bit vague and aspirational but who knows?

@tull
I think most of the problem is on the spending side but the deficit is so large it will have to be tackled from both sides

@DE

Yes, next step will be some honesty from our leaders on spending cuts.

Does anybody know where you can find tailored bond yield graphs for countries that can be digitally copied?

The Bloomberg ones are brilliant but you can only print them, not save them.

@ Rob

you mean an actual bloomberg terminal or bloomberg.com (that u cant save to)?

Also,

Tax Revenues = €9,005m

Total Expenditure (including debt interest) = €16,816

My own deficit of €7,811m

The actual deficit is €6,961

What is this difference of €850m (exactly)?

Pat Donnelly says:”Sorry, but we are not at home to cynics, who try to damage Ireland Inc with their endless bad news. Shame on you!
This is a serious economics blog.”
I feel no shame for my post above. I am not one who helped to create the mess. Neither am I a cynic. I am serious. I believe in the truth. Financial markets are not fooled by obfuscation.
Spin does not alter reality in relation to the shocking state of the government finances.
I run a business. As far as I am concerned the carbon tax is the last straw. Look at the stupid travel tax. I note that you did not address issues which I raised. You are obviously happy with government support for a zombie bank. Meanwhile viable businesses are being starved of finance. Once more I will spell it out. The government has no coherent policy on small businesses. Small businesses if properly supported can boost employment and tax revenue. The government is flogging a dead horse at present. Hand in hand with cuts must run a coherent strategy to develop employment. Otherwise government policy is doomed to failure.

Irish date out this morning again showing signs that we’ve hit the bottom…..

* Irish ‘core’ retail sales (ex-garages) increased for a third
straight month in March. That has not happened since May 2007.

* More tellingly, the value of ‘core’ sales was up for three out
of the last four months (+0.7% mom in March). That suggests price
discounting is slowing, as consumer demand recovers.

* Elsewhere, numbers on the Live Register fell by 500 (or 0.1%).
The total is still down since the recent peak in January 2010. All of
this better data (along with growth in both of this week’s PMIs for the
first time in almost 30 months) confirms that Ireland has exited
recession. But it is being hidden among the bond market turmoil.

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