Last week, Minister for Finance Michael McGrath and Minister for Public Expenditure and Reform Paschal Donohoe announced that tax revenues to the end of March were €19.7 billion, €2.5 billion (almost 15 percent) ahead of last year. The Exchequer deficit of €2.1 billion compares with a surplus of €0.2 billion in the same period last year, with the difference driven by the transfer of €4 billion to the National Reserve Fund in February 2023.
Notably, corporation tax receipts increased by €1.3 billion to €3.2 billion. The increase in corporation tax has been explained as a timing issue with payments made in March which would otherwise be expected in August. At €7.4 billion, income tax receipts remained solid, up 8 percent and reflecting continued resilience in the labour market. VAT receipts increased by 16 percent to €6.8 billion. However, allowing for a technical adjustment, the underlying growth rate of VAT receipts was 12.5 percent in the first quarter.
Commenting on the figures, Minister McGrath noted:
“Today’s figures confirm strong momentum in our economy during the first quarter of the year.
The strength of income tax shows that the labour market remains resilient, while VAT receipts suggest consumer spending remains reasonably solid.
Once again, corporate tax receipts have surprised on the upside, though my officials estimate that around half of the corporate tax take is unlikely to be permanent.
It is, of course, essential that windfall corporation tax receipts are not used to fund permanent expenditure. This is why I transferred €4 billion to the National Reserve Fund in February – there is now €6 billion in the Fund.
I will also seek government approval in the coming weeks for a longer-term fund to meet the costs of an ageing population and other pressures that we know will arise in the future.
Finally, the Government will publish the Stability Programme Update on 18th April, setting out my Department’s updated economic and fiscal assessment.”
Read the full report at www.gov.ie.
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