Solid underlying tax performance in Quarter 1

The Department of Finance and the Department of Public Expenditure, NDP Delivery and Reform have published the Fiscal Monitor for March 2024. Tax revenues to the end of March were €20.1 billion, €0.3 billion ahead of last year but behind target due to decreased corporation tax receipts. The Exchequer surplus for the first quarter of 2024 of €0.3 billion compares to a deficit of €2.1 billion in the same period last year, with a surplus of €3.5 billion recorded on a 12-month rolling basis. 

Notably, corporation tax receipts decreased by €0.7 billion to €1.9 billion, with indications suggesting this reflects timing issues. At €7.9 billion, income tax receipts remained solid, up 7.6 percent and reflecting continued resilience in the labour market. VAT receipts increased by 5.4 percent to €7.1 billion but were slightly behind target. 

Commenting on the figures, Minister McGrath noted: 

“The first quarter figures are, in many respects, a continuation of the pattern evident in the second half of last year, with steady growth in income tax and VAT receipts but with significant volatility in corporation tax revenues. 

The performance of the income tax and VAT tax heads provide evidence of a domestic economy that is performing well, notwithstanding continuing international headwinds. With record employment levels, the labour market remains in robust shape. As inflation continues to fall, the vast majority of households will experience a gain in income in real terms across this year, resulting in improved living standards overall. 

While it is expected that the fall in corporation tax this month relates to timing issues and is likely to be made up later in the year, it serves to remind us of the inherent unpredictability in what is a highly concentrated revenue stream. 

This volatility, and the concentration of these receipts, underpin the Government’s policy of establishing longer-term savings vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – that will help future-proof our public finances.”