article banner

Exchequer Returns March 2018 - Peter Vale commentary

Peter Vale Peter Vale

Today's Exchequer figures were a bit of a mixed bag, with both positives and negatives for the Minister to ponder over.

One of the positives was the robustness of the VAT receipts. There was some concern at the drop off in VAT compared to last year, but today's numbers will have done much to allay those fears.

There will be some concern at the fall in Income tax receipts in March, blamed on a dip in returns from the self employed sector. Lower than expected income tax receipts has been a feature of previous returns and hard to rationalise against a strong labour market. However overall, figures for the first three months of the year are on target and up 5.7% on 2017.

The early months of the year aren't typically key for corporation tax so we wouldn't read much into the figures at this stage. For what it's worth, the numbers are on target at this point.

Sustainability of our tax receipts, in particular corporation tax, continues to get much coverage. In our view, despite significant developments on the international tax front, we shouldn't see any dramatic drop in tax revenues. On the contrary, the limited shelf life of traditional offshore tax havens is likely to see more taxes paid in countries such as Ireland, where real operations are housed.

That said, threats and uncertainty exist, with the EU's digital tax proposals ticking both of these boxes. 

So overall a bit of a mixed bag but things broadly still on track. At this point the potential for significant tax cuts in October remains.