End-August Fiscal Data Post author By Philip Lane Post date September 4, 2012 4-9-2012 Analysis End August Tax Receipts 4-9-2012 Analysis End August Net Voted Expenditure 4-9-2012 End August Exchequer Statement 4-9-2012 Information Note End August Exchequer Statement Categories In Uncategorized 38 Comments on End-August Fiscal Data ← Whingeing → IMF Completes Seventh Review Under the Extended Arrangement with Ireland and Approves €0.92 Billion Disbursement 38 replies on “End-August Fiscal Data” Looks like a bit of a wobble in August 2012. Strip out the €250m corporation tax receipt that was due in December 2011 and tax is €115m ahead of budget which not bad year to date. Costs however are €200m ahead of budget. First wobble this year I think, hopefully it was a blip. Revenue down 7.1% on the monthly profile, with all main headings down. This is a very bad result. It should not be a surprise but one has to wonder where one goes at this point. Well done Angela Merkel. The 30m proposed HSE cut in services to the disabled equates to 2% of the PS allowance bill and 20% of the increments bill. @Jagdip This is more than a wobble. The real problem is the revenue fall. Slightly under profile in July, way under profile in August. The department info note has spun the YTD numbers for all they are worth but the it is the monthly revenue figures that are the real concern. The last we heard was that the 8.6% deficit target would be achieved ‘by a margin’. That margin has just got thinner. Seamus Coffey as usual with decent analysis. Actually behind when looking at May-August in isolation. Sorry link. http://economic-incentives.blogspot.ie/2012/09/tax-revenue-profiles.html Joseph —you win the ALL IRELAND for Whingeing , by a mile ; dont think you have ever posted without negative interpretation/connotation. Think of some positives–Dublin thronged for Tall ships ,followed by 35000 American visitors spending Dollars last week (hotels and restaurants never had such a good week); 85000 in Croker on Sunday with double that number planning coming to Dublin for final in two weeks time Is that you, JTO ? I think there have been hurling matches in Dublin in September before. @ Joseph, I don’t think the August tax figures will have much of an impact on the EDP deficit outcome. Last December’s Budget was framed around a general government deficit target of 8.6% of GDP. The arithmetic included an Exchequer tax revenue target of €35,825 million (up on the €34,027 million collected in 2011). This was reflected in the original monthly tax profile . As a result of some delayed Corporation Tax receipts from 2011 and the reclassification in 2012 of some PRSI receipts as Income Tax a revised profile was issued with the April Exchequer Statement for the final nine months of the year. This set out a tax revenue target of €36,375 million, with the €550 million increase attributable to these two factors, neither of which has any impact on the general government deficit measured under the EDP criteria. However, adding the actual tax revenue collected in the first three months of the year (€8,722 million) to the revised profile for the remaining nine months of the year (€28,005 million) gives a total of €36,777 million which, somewhat unusually, is more than €400 million above than the revised annual target. The annual profile has been shaped to rise slower than it should at the start of the year and faster than it should towards the end. The means we get a summer and autumn of once-a-month headlines about the “strong” performance of tax receipts. This will continue for another few months and but it is likely that there will be more months like August that miss the monthly targets so that the gap narrows. These monthly shortfalls (relative to somewhat quirky targets) mean that by December we will have to make do with tax receipts that are “on target” so on the revenue side it is likely that the 8.6% of GDP limit can be respected. FYI Blind Biddy still down at the gates of Leinster House fighting the good fight. Flew back this morning from the ParOlympics in London where she easily retained her Gold on the Bazooka Range. http://www.irishtimes.com/newspaper/breaking/2012/0904/breaking3.html @ tadgh o Laighin Is that you Bertie? Tall ships in Dublin, indeed and most people shuffling around with bewildered looks on their faces, wishing they could escape on one of the bloody things. Then our new found interest in American Football. Are you familiar with the Hail Mary in American football? Well it’s the equivalent of Ireland’s economic policies basically praying for a miracle and retrospective sharing of our blunder policy of agreeing to redeem every unsecured, unguaranteed, bondholder from here to timbuktu. Americans spending “dollars” well fancy that. Anyone, that has ever had anything to do with this site knows that Joseph Ryan has made honest, informed and highly constructive contributions. We have had quite enough of the bashing of those that can see the woods from the trees. Good luck with the debt to GDP ratio of 130% mentioned in the FT today. Personally, I think it will be closer to 145%. Perhaps I can challenge Joeseph for that All Ireland medal? @Tadgh O’Laighin The capacity of Croke Park is 82,300. I would love to go next Sunday but no ticket. So if you come across any of Fingers ticket, ‘the ones that could not be found’, be sure to post. PS The most positive event I have seen in this country years was the protest by many disabled people ‘standing up’ for themselves yesterday. They won, and more to the point, they deserved to win. That’s real positive. [I propose they cut TD’s monthly ‘Katmandu’ mileage allowanace to pay for it] @ JR Somewhat off topic but I saw this on the net yesterday “Always and I repeat always plenty of tickets available around the ground on the day of the AIHF. Just hang around the barriers into the grounds and mention to the Guards that you want one and you will be sorted in about 5/10 mins max. Football finals a different matter though”. In other news, the private sector is always more efficient than the public sector. How about this for return on capital ? http://www.irishtimes.com/newspaper/commercialproperty/2012/0905/1224323608468.html “The four-star resort was bought for almost €40 million and was subsequently enlarged and upgraded at a cost of well over €10 million. Estate agent Tom Barrett of Savills is now quoting a guide price of €10 million for the Sneem hotel which is located along the famous Ring of Kerry.” Some decent analysis here http://trueeconomics.blogspot.fr/ It’s a pity we still don’t have a general topics discussion facility on this site. This is off topic but deserving of an airing IMHO. Ireland suffered and continues to suffer because of poor financial regulation but in the wider financial world how worse than useless was Basel II and what is the point of 640 or so pages of Basel Fawlty III and the cult of the internal corporate model which is impossible to benchmark against anything else, unless of course in relation to consultant fee income ? And all the money JP Morgan lost recently- what good did the models do? 2 thought-provoking FT articles Andrew Haldane calls for rethink of Basel III http://www.ft.com/intl/cms/s/0/8a5e61b2-f34a-11e1-9c6c-00144feabdc0.html Regulators should keep it simple -Sebastian Mallaby http://www.ft.com/intl/cms/s/0/697e5ad4-f5ec-11e1-a6c2-00144feabdc0.html Budget deficit revised down to 9% Ireland has revised downwards its 2011 underlying budget deficit to 9 per cent of gross domestic product, the Department of Finance said today. The deficit figure, which excludes the €5.8 billion used to recapitalise the banking system last year, was lower than both the 10.6 per cent target set under the EU-IMF bailout programme and the 9.4 per cent figure published by the Department of Finance in April. http://www.irishtimes.com/newspaper/breaking/2012/0905/breaking30.html If the deficit target for 2011 was 10.6% and the actual figure came in at 9% and the tax take for this year are slightly ahead of target, does that suggest that the 2012 GGD will be in the region of 7%? It certainly gives a lot of slippage room in the October tax returns. If we can get some kind of deal on restructuring the banking debt, that could have quite a big impact on the projected 2013 deficit as well given that the PN interest payments really kick in next year. I blame the croke park agreement. What was the question? @Seamus Thanks for reply. I tried to post on your blog, but the word robot beat me. @Seamus / Niall My first thoughts on these figures focused on the deterioration in the YOY monthly comparisons for income tax (2012 vs 2011), May +9.4%/ June +8.8%/ July +2.3%/ Aug +1.6%, just as Niall has detailed. How is this level of slippage possible? Have the numbers in employment dropped significantly? Could bank redundancies, if they have happened, make up this slippage.? What about the changing pattern of employment in education, with teachers laid off for July? Is is possible that a really significant private sector employer (or as Niall suggests PS employer) is late paying July PAYE? Cutbacks in overtime,even across a range of industries, might explain it? It is certainly a conundrum. Niall’s explanation perhaps could explain it, but surely the DOF would not allow that? Either way, we may be in a new phase. I hope that job losses will not be contemplated this time. @Seafoid. re: Basel and all that. I know little of it, except to say that it is forcing deleveraging, which IMHO is doing far more damage to the real economy than austerity. Basel 11 or Basel 111 targets for banks on life support, with the blood transfusions coming from States that are also on life support, would hardly pass a first med exam. Seems to do well in economics, however. PS Thanks for advice on ticket. I will rumble one up eventually. PS I expect Galway to put it up to Kilkenny. Kilkenny are good but were made to look very good against a failing Tipp team. @seafóid “This is off topic….. ” You call that off topic? This is off topic: http://www.telegraph.co.uk/news/worldnews/asia/china/9523006/Chinese-bank-manager-hides-in-a-cave-for-eight-years.html @Carson we’re some fools if if end up paying up for those promissory notes; simpler to simply ‘tear them up’. http://www.guardian.co.uk/commentisfree/2012/sep/05/blair-era-finally-over The big idea of the post-1970s right in Britain and the US was that everyone would acquire a stake in capitalism, through home ownership (and treatment of houses as speculative investments); money-purchase pensions, where what you got depended on the stock market; modest ownership of shares or bank “products” linked to share indices; and opportunities, created by deregulation, to shop around for “deals” on services such as power supply, phones, savings rates and insurance. We would all, at least in our private lives, become members of the bourgeoisie, naturally sympathetic to “wealth creators” and their political allies. It may be true that only 1% are truly rich, but most of the 99% owe what wealth they have to houses and other tradeable investments, even if they are not always aware of it. For a time the strategy worked. Voters hesitated to support any party which threatened economic change that might cause house prices or shares to fall. New Labour was created to allay such fears. Now the neoliberal revolution has gone into reverse. In England, the proportion of households living in their own homes, which was 55% at the beginning of the 1980s, peaked at 71% in 2003, thanks to greater mortgage availability and Thatcher’s “right to buy” policy for council homes. It fell to 66% in 2010/11. Private renting accounted for 10% of households in 2001, now it is 16.5%. A report last year from the Smith Institute suggested owner occupation could be lower than 60% by 2025, and private renting well over 20%. If so, nearly two million fewer people will be living in their own homes. In the US, home ownership and the predictions for its future follow a similar curve. As for money-purchase pensions, stock market stagnation since the beginning of the century and steep falls in annuity rates leave many of the newly retired with nothing like the retirement incomes they expected. This is hardly likely to encourage those still at work to join pension schemes, as the government wishes. Neoliberalism, then, has failed to deliver on its promises. Houses have provided stores of wealth for the majority of Britons born before 1970. Equally, pension funds that carry defined benefits (almost wholly closed to newly recruited private sector workers) provide a steady income or, for those in their 50s and early 60s, the prospect of it. But younger generations struggle to access both pension schemes and houses. Home ownership rates among the under-45s are lower than they were in 1960. The steepest decline is among those aged 18 to 30. In 1997, nearly 35% owned their own homes. Now it’s fewer than 20%, a proportion that is projected to fall to barely 10% by 2020. At least half the UK’s private sector workforce has no pension of any sort, beyond what the state provides. More and more voters, therefore, will be worrying about jobs, benefits, rents, and debt interest rates, not about the value of houses, pensions or shares. The neoliberal attempt to create mass capitalism has hit the buffers. @ All FYI http://ftalphaville.ft.com/blog/2012/09/05/1146811/irelands-similar-case-for-banking-treatment/ The temptation to wait until October for a deus ex machina from Europe must be great. It is unlikely to show. @ All Of course, if the Draghi “bazooka” works, the athmosphere will be much better. http://www.telegraph.co.uk/finance/financialcrisis/9523871/Debt-crisis-Draghi-presents-umlimited-bond-buying-plan-to-ECB-council.html Off thread – looking forward to the next German Administration – worth a read: 09/04/2012 European Parliament President Call for Political Union Now is ‘Dramatic Mistake’ Leaders in Germany and elsewhere are making a big mistake by focusing on long-term EU reform when fast decisions are needed, says Martin Schulz, the president of the European Parliament. The German Social Democrat tells SPIEGEL that Europe needs to pool its debt, give the ESM a banking license and help Greece return to growth. SPIEGEL: Mr. President, “Frankfurt School” philosopher Jürgen Habermas has said there are only two possible strategies for Europe: a return to national currencies, or a political union. Is he correct? Schulz: Yes, we should have introduced a political union together with the euro. That’s something we failed to do, and need to catch up on. But that doesn’t help us at the moment. SPIEGEL: Why not? Schulz: There’s no point whining about missed opportunities. What we need right now is to act quickly and in the short term. I can’t accept us getting lost in theoretical debate in the current situation. A restructuring of the European Union isn’t pressing at the moment — what we need instead is to solve very difficult problems in a short space of time. http://www.spiegel.de/international/europe/interview-with-eu-parliament-president-martin-schulz-on-euro-crisis-a-853657.html Fresh off the IMF Press: Press Release: IMF Completes Seventh Review Under the Extended Arrangement with Ireland and Approves €0.92 Billion Disbursement http://www.imf.org/external/np/sec/pr/2012/pr12304.htm “Half way through Ireland’s extended arrangement, the Irish authorities maintain strong ownership and implementation of their adjustment program. All program targets for end June have been met. Benefitting from the strengthened European support signaled at the euro area summit at end June, Irish bond yields have declined significantly in recent months, and the country regained access to sovereign bond markets in July. “Nonetheless, the economic recovery is tentative and unemployment unacceptably high. Putting the financial sector into a position to support the recovery will require continuing efforts to return banks to profitability. Lowering funding costs by weaning banks off the costly Eligible Liability Guarantee scheme in an orderly manner is essential, as is reducing operational costs. The implementation of strategies to deal with mortgage arrears needs to continue to move ahead, so the CBI’s plans to monitor banks’ progress are welcome, and similar frameworks are needed for distressed credit to SMEs. To support these efforts, key issues for the effective operation of the new personal insolvency framework should be addressed in a timely manner. “Ireland’s rapid return to market financing following the June 29 statement by euro area leaders confirms the benefits of steps to improve Ireland’s debt sustainability and break the vicious circle between the banks and the sovereign. Timely agreement on such steps, especially ESM investments in the equity of Irish banks, offers real prospects for Ireland to durably exit its reliance on official financing, benefiting Europe as well as Ireland,” Mr. Lipton said. @PRGuy “Mr Chen, 42, was already a prosperous businessman in 1995 when he was given a golden ticket: a job at one of China’s largest state-owned banks. Like many others before him, he quickly took advantage, quietly siphoning off money and buying his own discotheque, supermarket, shrimp farm and plastics factory. Investigators also later confiscated a five-story building he owned in downtown Lingao, and his seven luxury cars. In 2003, however, a routine check exposed the 23 million yuan (£2.3 million) he had stolen, reportedly with the co-operation of most of the branch’s 34 other employees. Mr Chen, who had spent time in the army, was forced to go on the run, and disappeared into the nearby hills.” That is not helpful to my theory that China could turn out to be kind of a bigger version of Ireland – unless of course, the undergrowth in Wicklow is crawling with ex-bank staff. @docm You have criticised the CPA. Therefore, by definition, you believe that if public sector employees worked for nothing they would still be paid too much. We know that you are convinced that private sector credit expansion, the underpricing of risk and bank fraud along with foolish decisions to guarantee the banks played no part whatsoever in Ireland’s economic mess. @ grumpy “You have criticised the CPA. Therefore, by definition, you believe that if public sector employees worked for nothing they would still be paid too much.” Please to explain! “We know that you are convinced that private sector credit expansion, the underpricing of risk and bank fraud along with foolish decisions to guarantee the banks played no part whatsoever in Ireland’s economic mess.” Ditto! You might quote me the appropriate references in support of your view that I hold such views. @ grumpy Don’t try too hard! @ grumpy China has a load of issues that won’t be swept under the carpet indefinitely. Depending on it to drag the world economy out of recession seems rather far fetched. http://monthlyreview.org/2012/02/01/the-global-stagnation-and-china @docm ..and you are evidently an American. http://www.google.ie/url?sa=t&rct=j&q=irony&source=web&cd=1&cad=rja&ved=0CB4QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FIrony&ei=u89HUNjnCaOl0QWisIGoAQ&usg=AFQjCNHJoPpm1OeMv8-CSAkcTfIxOad4Ww @grumpy Naw! Not an Amercan, notwithstanding the tea=party influences: Seven_of_9 reckons he is a Ferengi, and attached to their international PR department backed up by a slave pool of Romulan accountants and bankers paid for by the K-O-C-H bros Int. He is a welcome additon to the blog and a source of some merriment to social democrats. @Seafoid I spent 4 nights in Parknasilla at wedding in July. It was still well managed with no signs of distress at that time. I hope everything works out well, it is a big employer in Sneem. I blame the public sector. For everything. Including alopecia @ All To more serious matters; not entirely off topic. http://www.independent.ie/business/questions-about-the-future-of-eu-lurk-beneath-debtcrisis-talks-3221555.html I think the item is by Brendan Keenan. It draws attention to the very significant recent speech by Draghi and the fundamental questions hiding behind the immediate problems confronting the euro, the key quotation being; “But the real question mark over the euro is not about fiscal balances or bank regulation. It is how countries with different levels of productivity and accumulated capital, both human and physical, are to share a common currency, without large transfers between richer and poorer.” IMHO, the proposed banking union could be a first step in answering it, provided that Germany recognises that it cannot continue to be odd man out with regard to the proposed coverage i.e. insisting that the existing cosy – and anti-competitive – relationship between its banks and the business sector continue, thereby further contributing to the imbalances which threaten to collapse the euro. @ Mickey Hickey I’m sure it will be fine. The business is sound but the amount of money lost on it is incredible. And I presume the taxpayer is picking up the tab as usual. @grumpy Have you been to Wicklow lately? There’s definitely something rustling in the undergrowth there. And where do you think all the bank staff that have been/will be laid off are headed!?! Comments are closed.