The Department of Finance will this evening release the Exchequer Returns for the opening month of 2014. The Exchequer posted a deficit of €11,497m for the whole of 2013 compared with a budget deficit of €14,892m in 2012. The overall Exchequer deficit was €267m higher than the figure of €11,230m forecast in the Irish Stability Programme Update published back in April and it was €197m higher than the projected out-turn for 2013 of €11,300m that was included in the Budget 2014 document on October 15 last. <p>

The weaker than expected out-turn in the main reflected lower than anticipated tax receipts but the savings on the expenditure side was a welcome development, and a sign that the Government is not going to spend money just for the sake of it. Overall tax revenues in 2013 totalled €37,806m, an increase of €1,160m or 3.2% on 2012. Receipts at year-end were €144m below official projections. However, both corporation tax receipts and stamp duties were well ahead of expectations. Against that, VAT receipts were €224m below the Department of Finance forecasts. Meanwhile, property tax receipts totalled €318m in 2013, €68m greater than what was anticipated. <p>

We wouldn’t be too negative on the tax figures all things considered, with the indications of a better year ahead in 2014. <p>

The Department is targeting an Exchequer deficit of €9,595m in 2014. Meanwhile, the tax figures for January have been complicated by the introduction of the new SEPA payments system. Under SEPA, the first presentation of direct debits will take 7 banking days to process resulting in some tax receipts being delayed from January to February. <p>

As such, the end-January Exchequer figures will be down in year-on-year terms. However, this is a technical timing issue and does not alter the tax forecast for the full year. It is estimated that the SEPA impact will push tax receipts down by €700-750m in January. <p>

<B>In January 2013, the Exchequer posted a surplus of €704m. Taking all things into consideration, we are now looking for a small surplus of €50m in the first month of 2014.
<p><h5>Alan McQuaid</h5>


Disclaimer: www.merrion-capital.com/disclaimer

Merrion Stockbrokers Limited (registration no. 307878)
is a limited liability company whose registered office is at
Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.