Tax receipts to end of July up nearly 10% on same period last year
The amount of tax collected by the State between January and the end of July was up 9.5% on the same period last year, driven by income tax, corporation tax, VAT and excise duty.
Latest Exchequer Returns show that in July alone €7.6 billion in tax was received, up 10.4% or €700m on the same month last year.
That meant that over the first seven months of the year, €52.3bn in tax was collected, up €4.5bn or 9.5% year on year.
€19.6bn of that came from income tax, 7.4% higher than what was collected in the first seven months of last year.
The corporation tax take for the year to date was 15.3% higher than at this point in 2023, at €12.5bn.
July is not a key month for corporation tax, but nevertheless receipts were up by €39m compared to July of last year at €400m.
However, it is an important month for VAT and €3.2bn was taken in during July, up €300m or 9.7% year on year.
That brought the total VAT take since the start of the year to €14.2bn, almost 7% up on the same period a year ago.
However, spending continues to run ahead of what was budgeted for.
But by the end of July, total voted gross expenditure was €55.7bn, 13.2% greater than in the same period last year and 4.8% ahead of what was planned.
This is despite the Ministers for Finance and Public Expenditure putting pressure on Cabinet colleagues to rein in spending over recent months.
In particular, health spending has been running more than €1bn over budget, prompting the Ministers for Public Expenditure and Health to agree a series of measures to address the problem.
Gross voted current spending is currently running 4.3% ahead of where it should be in the year to the end of July, while gross voted capital spending is 9.4% over budget.
Despite the ongoing issues with expenditure, at the end of July the Exchequer had recorded a surplus of €3.4bn.
This compares to a surplus of €700m in the same period last year, an improvement of €2.6bn, although the annual comparison is distorted by the transfer of €4bn to the National Reserve Fund last year.
Gross revenue to the end of July stood at €64bn, up €4.6bn or 7.7% compared to the same period last year.
The returns also show that excise duty receipts of €700m were up on July last year by €200m.
On a cumulative basis, excise receipts of €3.6bn are up on the same period in 2023 by €500m or 14.7%.
Stamp duty receipts are up by €80m or 9.9% to €886m by the end of July relative to the same period last year.
Meanwhile, capital gains tax receipts stood at €363m, down by €18m compared to the end of July 2023.
Speaking to RTE News, the Minister for Finance described the July Exchequer returns as a really strong performance, which shows the resilience of the Irish economy and provides strong prospects for the delivery of the Budget on October 1st.
Asked if the outturn would now put pressure on the Government to deliver more in the Budget, Mr Chambers said the Summer Economic Statement had laid out the parameters and the focus will be putting money back into people’s pockets.
He said the Government acknowledges that there is still pressure on many families around the cost of living.
“That is why I think there will still have to be some supports around the cost of living as part of the budgetary process,” he said.
“It may not be on the scale of what we had introduced in previous years when inflation was at 10%. But we acknowledge that for many people it is still a central issue and that is why as part of our wider consideration cost of living will be of central importance to us.”
Regarding ongoing spending over runs, Mr Chambers said putting controls on the Department of Health is of utmost importance and progress should be seen in the coming months.
Asked whether recent upheaval in global markets amid concerns about a possible recession in the US could have an impact on Ireland’s future economic growth, Mr Chambers said while projections remain the same, there is significant geopolitical risk in the wider economy.
“That is why we need to make sure as part of our fiscal management that we are careful and we are cautious when we are making budgetary decisions,” he said.
He added that putting surpluses aside, particularly where there is concentration risk, is a central part of the budgetary strategy.
Regarding the further increase in unemployment in July, Mr Chambers said there remains significant opportunities in the labour market and Ireland is still technically at full employment.
“But that is something we will continue to monitor over the coming weeks and months,” he said.
Peter Vale, Tax Partner at Grant Thornton Ireland, pointed to the VAT receipts as demonstrating particular strength in the month, indicating ongoing robust consumer spending.
“However increasing global economic uncertainty will impact on consumer confidence and we could see VAT returns impacted later in the year,” he added.
He said that uncertainty could also extend to the corporation tax front.
“A recession in the US or a broader global economic downturn would almost certainly impact on corporate tax receipts, in particular given our reliance on such a small number of multinationals,” he explained.
“While a recession still appears unlikely, corporate tax receipts in the key month of November would be impacted in such an event.”
He added that while corporate tax receipts remain robust, uncertainty underpins their future trajectory, which may make Budget day planning more difficult for the Finance Minister.
Article Source – Tax receipts to end of July up nearly 10% on same period last year – RTE
