From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
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Tax receipts were €24.1 billion to end-April, up €3 billion or over 14 per cent on an annual basis, driven by strong income tax, VAT, and in particular, corporation tax receipts.
At €10.4 billion to end-April, income tax receipts remain solid, up 9½ per cent on an annual basis, reflecting continued resilience in the labour market.
April is a non-VAT-due month, but on a cumulative basis VAT receipts of €7 billion were €1 billion or 16 per cent higher than in the same period last year. However, the year-on-year comparison is inflated by a technical factor^; the underlying growth rate of VAT receipts was almost 13 per cent to end-April.
At €3.5 billion to end-April, corporation tax receipts were up €1.3 billion driven by the strong performance in the first quarter which may reflect, in part, a timing issue, that is, the earlier payment of receipts, but it should be emphasised that this is subject to considerable uncertainty.
Total gross voted expenditure to end-April amounted to €26.9 billion, €1.6 billion or 7.8 per cent above the same period in 2022 and €0.1 billion or 0.5 per cent below profile.
An Exchequer deficit of €3.7 billion was recorded to end-April 2023. This compares to a deficit of €1.1 billion in the same period last year. The deterioration in the Exchequer balance is due to the transfer of €4 billion to the National Reserve Fund (NRF) earlier this year.
On a 12-month rolling basis, the Exchequer recorded a surplus of €2.4 billion. Excluding one-offs i.e. transfers to the NRF, proceeds from the disposal of bank equity and estimated ‘excess’ corporation tax receipts, an underlying exchequer deficit of approximately €4 billion was recorded on a 12-month rolling sum basis.
Commenting on the figures, the Minister for Finance Michael McGrath said:
“Today’s figures show that the strong momentum in tax receipts evident at the start of the year continued in the month of April. In particular, the solid growth in income tax demonstrates the resilience of the labour market. As I have stated previously, potentially volatile corporation tax receipts provide an artificially positive picture of the public finances at the current time.
"These receipts are, of course, very much welcome, and reflect well on Ireland as an attractive location for highly profitable multinational firms. However, it is important to note that corporation tax receipts are highly concentrated among a small number of companies and therefore cannot be guaranteed at current levels into the future. My department estimates that almost half of the corporate tax take is potentially ‘windfall’ in nature.
"This government’s prudent management of the public finances will help ensure that we are in a position of strength to meet the key challenges facing the economy over the coming years and we are taking steps to address the risks around ‘windfall’ corporate taxes.
"A total of €6 billion has now been transferred to the National Reserve Fund to strengthen our economic and fiscal buffers. I will shortly publish a scoping paper setting out high level principles regarding a long-term savings fund. Subject to government approval, this will require bringing legislation to the Oireachtas and work on advancing this proposal will continue to be undertaken by my officials in the period ahead.”
The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe, said:
“The publication of today’s end April fiscal figures show significant growth in public expenditure of over €1½ billion compared to this time last year. This additional expenditure demonstrates investment, set out in Budget 2023, across a range of vital public services and supports for our citizens. It includes extra teachers, more health supports, enhanced social protection payments and more affordable childcare. Increased capital spending reflects the ramp up in the delivery of vital infrastructure and investment under our National Development Plan.
"The government recognises the ongoing cost of living challenges faced by people today. These April figures include the payment of €200 lump sum to all recipients of long term social protection payments and Working Family Payment. This is part of the €1.3 billion package of targeted tax and expenditure measures announced in February to continue our response to high price levels. This complements a range of temporary and permanent measures previously introduced and brings the total amount of fiscal support since 2022 to €12 billion.”
^ The Revenue Commissioners withheld €0.2 billion of receipts from December’s figures in order to fund potential repayments in January; these funds were returned to the Exchequer in January this year.