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State pulls in highest ever amount of tax with a record €50bn

The tax take for last year reached a record high of just over €50bn.

The State took in €2.87bn more in taxes last year than had been initially expected.

The figures were further boosted by the one-off sale of AIB shares, according to the Exchequer Returns published last night.

The State’s tax income is now 60pc above the 2010 low point.

However, last year’s gains in income were offset by spending increases, resulting in a deficit in 2017 when the €3.4bn AIB shares windfall is stripped out.

The tax take for last year was slightly above target or profile, with €50.737bn collected.

That compares with €47.86bn in 2016, which surpassed the previous peak in 2007.

An Exchequer surplus of almost €2bn was recorded for 2017, but that primarily reflects proceeds from the sale for €3.4bn of more than 28pc of the State’s stake in AIB.

An underlying deficit of around €1.5bn, was recorded, when the AIB shares windfall is excluded.

The latest figures show income tax receipts of €1.726bn were collected in December, coming in €15m above profile for the month.

This equates to a 6.3pc increase compared to December 2016.

But, that number is 1.2pc below where they had been expected to be for the year.

VAT receipts, a key measure of activity in the domestic economy as well as a source of revenue for the Government, came in 0.5pc below target for the year at €13.3bn.

Even so, the VAT receipts were up 7.1pc compared with December 2016.

Cumulative tax revenues of €50.737bn were collected in 2017, an increase of 6pc on 2016. However that doesn’t include the likes of PRSI, in reality another big source of State income.

Finance Minister Paschal Donohoe said the figures showed a “very solid performance and clearly underscores the improving economy”. He said the underlying deficit was around €1.5bn.

“This fiscal out-turn provides a good platform to start 2018,” Mr Donohoe said.

“However, we remain vigilant to the potential challenges we face, including Brexit.”

Davy Stockbrokers said the Government was now within “touching distance” of a budget surplus. “We expect the deficit to equal 0.3pc of GDP in 2017, falling to 0.2pc in 2018,” said Davy economist David McNamara.

“One concern is the increased reliance on corporation tax, now accounting for 16pc of tax revenues and driving much of the tax outperformance. The volatility of corporation tax adds uncertainty to the Government’s revenue base as demographic and infrastructure pressures significantly add to spending in the coming years.”

Meanwhile, bond investors piled in to be among lenders to the State yesterday, as the Government borrowed €4bn on the bond markets.

Total orders placed by would-be investors topped €14bn, helping keep the yield – or effective interest rate for the State – at 0.94pc. It means in effect the State is paying an interest bill of less than 1pc a year to borrow over 10 years.

The deal means that roughly a quarter of the NTMA’s total 2018 borrowing target, which it said is between €14bn and €18bn, has already been reached.

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