Irish half-year tax take 3.4 percent above target

DUBLIN, July 4 (Reuters) - Ireland (Other OTC: IRLD - news) collected 3.4 percent more tax than expected in the first six months of the year, almost a percentage point lower than it took in a month earlier, the Finance Ministry said.

Ireland had taken in 4.3 percent more tax revenue than expected at the end of May, but the ministry had said some large unexpected payments significantly driving the increase would likely unwind over the coming months.

Corporation tax, which surged to record levels last year, remained the largest contributor to the outperformance, coming in 19 percent ahead of target. That was a moderation on the first quarter of the year when it was almost 90 percent higher.

Income tax returns, the largest tax category, came in on target but value-added tax (VAT), the second-largest, was 3.6 percent below expectations. Excise duties, the other major category, grew 14 percent faster than expected.

The country had a fiscal deficit of 1.1 billion euros over the first six months after government spending came in 0.2 percent lower than expected. Ireland forecasts that its deficit will fall to 0.9 percent of gross domestic product this year.

The government also expects its tax take to be 2 percent higher than forecast by the end of the year and Finance Minister Michael Noonan has said the potential collateral damage from Britain's vote to leave the European Union will not derail his plans to further increase spending and cut tax next year.

The economy is forecast to grow faster than any other in Europe for the third straight year in 2016, but Noonan has said his department would cut the forecast for 2017 GDP growth to around 3.4 percent from 3.9 percent and warned of worse ahead if Britain strikes an unfavourable post-Brexit deal with the EU. (Reporting by Padraic Halpin; Editing by Janet Lawrence)