December 1, 2015 / 8:02 PM / 3 years ago

UPDATE 1-Ireland slashes budget deficit forecast on bumper tax take

* Fin Min cuts 2015 deficit forecast to 1.7 pct from 2.1

* Forecast in early 2015 was 2.7 pct

* Tax take almost 3 bln above forecast at end Nov (Adds details, quotes)

By Conor Humphries

DUBLIN, Dec 1 (Reuters) - Ireland slashed its year-end budget deficit forecast on Tuesday to 1.7 percent of gross domestic product (GDP) from 2.1 percent, as the tax take in Europe’s fastest growing economy far exceeded expectations in November.

That would leave Ireland with a deficit close to half the 3 percent target set under its EU-IMF bailout in 2010, which rescued the country from a property and banking collapse.

Earlier this year, the government forecast a budget deficit of 2.7 percent of GDP.

But a combination of a booming economy and a surge in corporation tax paid by multinationals changed the calculations, Finance Minister Michael Noonan told a parliamentary committee.

“On the assumption that December will be in line with forecasts it, would be safe to say now that the end of year deficit will be ... around 1.7” percent of GDP, Noonan said.

“For 2016 we were pitching for 1.2, but ... it would be a safe assumption to take 0.4 off that as well. That would be 0.8, 0.7 percent.”

The tax take was 470 million euros better than expected in November, bringing the total overrun for the first 11 months of the year to “a shade under 3 billion euros,” Noonan said.

The government has said the high tax take is caused by a combination of a booming economy, which is forecast to grow by around 6 percent this year, and higher corporation tax payments by U.S. multinationals in Ireland.

Corporation tax accounted for over 2 billion euros of the 2.5 billion euro overrun at the end of October. Noonan has said the increase is sustainable and will likely be repeated next year.

Ireland in 2010 agreed that it would cut its deficit below 3 percent by the end of 2015 and balance its budget by the end of 2018.

Noonan said that discussions in the European Union about the possiblity of defining a balanced budget at 0.5 percent of GDP meant that Ireland may balance its budget in nominal terms before 2018. (Editing by Tom Heneghan)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below