From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
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Fiscal performance broadly in line with expectations to end-November, corporation tax recovers in key month – Ministers McGrath & Donohoe
Tax receipts amounted to €82.0 billion to end-November, up by €4½ billion (5.8 per cent) on the same period last year. Growth in income tax, VAT and corporation tax receipts over the course of the year have been the main drivers of the annual increase.
At €30.3 billion in the year-to-date, income tax receipts have recorded strong growth throughout the year, and were €2.1 billion (7.3 per cent) ahead of their end-November 2022 position. November is the key month for income tax as it includes returns from self-employed taxpayers; income tax receipts in the month amounted to €4.6 billion, €0.3 billion (5.7 per cent) higher than in November last year. The income tax-take this year reflects the strength of the labour market, where employment is now at its highest level ever.
VAT receipts to end-November amounted to €20.1 billion, €1.6 billion (8.6 per cent) up on the same period last year. November is the last VAT-due month of the year, with relatively muted growth of just under 1½ per cent recorded on last year.
November is also the key month for corporation tax receipts, containing returns from a number of large multinational taxpayers. Receipts of €6.3 billion in the month were ahead of November last year by €1.3 billion (almost 27 per cent). This was a sharp reversal in the trajectory of corporation tax after three consecutive months of decline, once again highlighting the exceptional volatility associated with this tax head. The growth in these receipts during November means that total corporation tax revenues amounted to €22.0 billion in the year-to-date, €0.9 billion (4.2 per cent) ahead of last year. This is broadly in line with expectations as set out in Budget 2024.
Total gross voted expenditure to end-November amounted to €82.4 billion, up by €7.45 billion or 9.9 per cent on 2022 and €1.4 billion or 1.7 per cent ahead of profile. This reflects supports provided as part of the Budget 2024 cost of living package, including funding for the three electricity credits to be provided to households.
An Exchequer surplus of €5.4 billion was recorded to end-November, a decline of almost €7 billion on the surplus recorded in the same period last year. The decline in the surplus reflects policy-driven increases in public expenditure as well as the transfer of €4 billion to the National Reserve Fund earlier this year (neutral from a general government accounting perspective).
Commenting on today’s figures, the Minister for Finance Michael McGrath said:
“The end-November Exchequer returns confirm that we are, broadly speaking, where we expected to be at this point in the year. The growth in income tax and VAT receipts we have seen over the course of the year points to the fundamental resilience of our economy despite all the external challenges we are facing.
"The stand-out feature of the November performance is, of course, corporation tax: after three months of decline, a large increase in receipts this month means this revenue stream is once again comfortably ahead of last year.
"However, it is crucial to place this in context. While corporation tax is now 4 per cent ahead of 2022, it is clear that the era of persistent over-performances is coming to an end.
"The volatility in this revenue stream highlights the importance of ensuring that permanent fiscal commitments are not made on the basis of temporary receipts. Instead, the establishment of the two new long-term savings vehicles (the Future Ireland Fund and the Infrastructure, Climate and Nature Fund) will use these windfall corporation tax to help finance known future fiscal challenges, such as an ageing population, climate change and digital transition.”
The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe, said:
“Today’s figures reflect Government’s significant year-on-year increase in expenditure on public services. This growing level of resources reflects the additional demand and complexity facing our public services particularly in the health and education sectors.
"The government is acutely aware of the impact of increases in the cost of living and inflation right across the economy. Our strong economic performance, evidenced by continued growth in tax revenue, has enabled the continuation of our responsive policy approach to the economy. This includes the rollout of Cost of Living Supports with additional Social Protection payments for those in receipt of the Working Family Payment, Disability and Fuel Allowance and the provision of funding for the three Electricity Credits, which will begin to hit household bills from start of December. These measures will help support households with energy and other costs over the winter period."