Today’s exchequer figures represent a bit of a mixed bag for the Minister for Finance.
On the positive side, the overall figures are slightly ahead of forecast. However, most of the key tax heads underperformed, with VAT the only positive performer, even though February is a “non month” for VAT purposes. Lower than expected VAT repayments and an increase in MOSS receipts were highlighted as the reasons behind the positive VAT figures.
With employment figures showing strong growth, it is surprising that we are not seeing a resultant increase in income tax receipts, notwithstanding the lower income taxes that kicked in at the start of the year.
The Minister will hope that ongoing strong VAT receipts, combined with expected healthy corporation tax collections, prop up any underperformances elsewhere as the year progresses. However longer term, both VAT and corporation tax receipts remain susceptible to developments elsewhere, including Brexit and potential US tax reform.