October Exchequer returns show continued decline in corporation tax

The October Exchequer figures show that tax revenues of €66.5 billion were €2.5 billion ahead of the same period last year, primarily driven by income tax and VAT. However, an Exchequer deficit of €0.9 billion was a recorded to end-October, €8.2 billion down on the same period last year. Cumulative corporation tax receipts of €15.7 billion in the first ten months of the year are €0.4 billion, or 2.7 percent, below their level in the same period last year. This reflects the weakening of exports over the past year and, in particular, the decline in pharmaceutical exports. 

The Department of Finance press release on the publication of the October Exchequer figures, notes that corporation tax receipts declined for the third consecutive month year-on-year. October 2023 corporation tax receipts of €1.3 billion were down €1 billion on October 2022. 

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

“The end-October Exchequer returns present a mixed picture of our public finances. While income tax and VAT remain steady, demonstrating the underlying strength of our economy, we have now seen corporation tax decline for a third consecutive month. 

A fundamental building block of the Government’s fiscal strategy is the assumption that a large part of the increase in corporation tax receipts in recent years is windfall in nature. 

This is why it is so important that permanent fiscal commitments are not made on the basis of windfall revenues; instead, running a budgetary surplus is the correct approach. 

It is also why, in Budget 2024, I announced the establishment of two new long-term investment funds – the Future Ireland Fund and the Infrastructure Climate and Nature Fund – that will allow us to invest temporary ‘windfall’ corporation tax receipts to provide resources for known future fiscal challenges and ensure that these receipts do not become part of the permanent expenditure base. 

I am working with my officials to progress the necessary legislation and this is a key priority for the Government in the year ahead.”