From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
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Tax receipts were €11.4 billion to end-February, up €1.3 billion or 12½ per cent on an annual basis, driven by strong income tax, corporation tax and, in particular, VAT, although the latter tax head was inflated by a technical factor which boosted receipts. When this technical factor is adjusted for, total tax receipts increased by 10½ per cent compared to the same period last year.
At €5.1 billion to end-February, income tax receipts remain solid, up 7½ per cent on an annual basis, reflecting the continued resilience in the labour market.
February is a non-VAT-due month, but on a cumulative basis VAT receipts of €4.1 billion were €0.7 billion or 21 per cent higher than in the same period last year. However, the year-on-year comparison is inflated due to a technical factor whereby €0.2 billion of receipts withheld from December’s figures to fund potential repayments in January were returned to the Exchequer. Excluding these receipts, VAT was up 15 per cent on an underlying basis.
At €0.6 billion to end-February, corporation tax receipts were up €0.3 billion driven by increased profitability among large corporates across a range of sectors.
Total gross voted expenditure to end-February amounted to €12.3 billion, €0.8 billion or 6½ per cent above the same period in 2022 and €0.3 billion or 2.4 per cent below profile.
Gross voted current expenditure of €11.6 billion, €152 million (-1.3%) below profile and €0.6 billion or 5.6 per cent ahead of the same period last year. This reflects increased spending on day-to-day services in health, education and childcare as well the provision of supports for those arriving in Ireland from Ukraine.
Gross voted capital expenditure of €695 million is €143 million (25.9%) ahead of the same period in 2022. This reflects increased investment in infrastructure across sectors including education, and retrofit projects.
An Exchequer deficit of €2.5 billion was recorded to end-February 2022. This compares to a surplus of €0.9 billion in the same period last year. The €3.5 billion deterioration in the Exchequer balance is due the transfer of €4 billion to the National Reserve Fund last month.
Commenting on the figures, the Minister for Finance Michael McGrath said:
“Today’s figures show that tax receipts continued to record robust growth in the opening months of this year. In particular, the solid growth in income tax and VAT receipts are a positive signal of the resilience of the domestic economy, and underline the strong employment performance with almost 2.6 million now at work.
"I am acutely aware that for so many, the high cost of living and in particular high energy bills are a real challenge. This government has acted repeatedly to provide direct relief to people and firms struggling with the rising cost of living. Last week, Government announced a further suite of cost of living supports worth €1.3 billion. This brings the total direct support on the cost of living challenge to approximately €12 billion. I believe this response strikes the right balance between supporting households and firms, while ensuring fiscal sustainability and not exacerbating inflationary pressures.
"As we address the challenges of today, Government must also be conscious of the future. This is why the government transferred a further €4 billion to the National Reserve Fund last month. This will help rebuild our fiscal buffers and ensure that we are in a position of strength to meet the challenges, and seize the opportunities, of the future.”
The Minister for Public Expenditure, NDP Delivery and Reform Paschal Donohoe said:
“Over €12 billion has been spent across all government departments to end February 2022. This reflects the significant investment set out in Budget 2023 to support ongoing improvements in our public services and the delivery of critical capital projects.
"This funding is also supporting our economy and society to respond to external challenges including responding to cost of living pressures and providing supports for those arriving on our shores from Ukraine.
"We spent almost 26 per cent more on capital in the first two months of 2023 in comparison to 2022. This demonstrates the continued progress of the ambitious National Development Plan including providing more schools and classrooms, supporting the retrofitting of houses and the rollout of the National Broadband Plan.”