Robust tax revenues reported in May’s Fiscal Monitor

The Department of Finance and the Department of Public Expenditure, NDP Delivery and Reform have published the Fiscal Monitor for May 2024. This month’s report shows an increase in tax revenue to end-May of €1.2 billion (up 6.2 percent). The increase was driven by strong VAT receipts, up €0.4 billion (12.2 percent) on the same period last year. Income tax receipts increased by €0.9 billion (6.7 percent) when compared with the same period in 2023. Corporation tax receipts showed a recovery from the decline in quarter 1 and are now on a par with the same period last year.

Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:

“May is an important month for tax revenues in the exchequer calendar and the positive performance is a welcome indicator of the strength of our economy, most clearly reflected in the healthy growth in income tax and VAT revenues. With a record 2.71 million now at work in Ireland and incomes rising faster than the rate of inflation, living standards are improving again and consumer activity in our economy is being supported.

Of course, the most notable feature of the May tax outturn is the spike in corporation tax receipts. As a result, overall corporate tax revenues have recovered after a sharp drop in the first quarter of the year and are now level with the same period last year.

I would caution, however, that the significant volatility, in both directions, we have seen from month-to-month in this revenue stream is yet more evidence of the unreliability of these highly concentrated receipts, and the associated risks this brings to our public finances.

The fact that we are highly dependent for a large portion of our corporate tax receipts on a very small number of companies requires a decisive policy response to ensure our public finances are sustainable into the future. We cannot necessarily rely on some of these receipts into the future. That is why the setting up of the Future Ireland Fund, and the Infrastructure, Climate and Nature Fund is a landmark and necessary policy development and one I am determined to deliver on.

This vulnerability underscores the importance of continuing to pursue a balanced and sustainable budgetary policy. With this in mind, Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement in the coming weeks.”