An Saoi: The underlying tax figures for February are dire. Just look at the income tax figures. February is the month when employers send in their forms P35 with any balances due for 2009, and we also get our first feel for 2010 with the January remittances. Despite the income levy, the payments received are down 12% on 2009 and 18% on 2008. They are also €115M below the Dept. of Finance’s figures for February, prepared just four weeks ago. The weather has little to do with income tax.
VAT is slightly over the monthly target. However, as VAT returns are not due in February, this has to be down to technical reasons, for example Revenue staff slowing down refunds or late payments actually due in January. It is unlikely that VAT at point of entry could explain the difference, as customs duties are down. In addition, excise duty is poor and VAT payable on withdrawal from bond would not explain the discrepancy.
All the other payment heads reflect a country mired in the quicksand of depression and going nowhere slowly. Despite the cut in thresholds, CAT is bringing in less tax as assets are devaluing more quickly. VRT for cars continues to decline despite the incentives. With few transactions taking place, stamp duties continue to slide.
The trend for Corporation Tax is unclear since the splitting of preliminary tax payments makes it very difficult to see what is happening yet.
The outlook for March looks even bleaker. The Jan/Feb VAT returns are payable, and that most reliable of predictors - the Central Bank’s credit card figures - shows that January was a complete washout. Credit card purchases were down 14.7% on January 2009, and a massive 29.4% on January 2008. At this stage, we can only presume that February wasn’t much better. Consumer surveys suggest that consumer sentiment is as cold as the weather. The reduction in short-term bank finance or its pricing may also be forcing many smaller businesses to turn to the Collector General as an alternative source of funding.
I am going to stick my hard neck out and estimate the end of year outcome as follows:
I will adjust next month, if necessary.
Mini-budget and further pay cuts in June? Because there will certainly be no pick up!