Corporation tax receipts more than doubled in August compared with the same month last year, with the latest spike in revenue from the business tax boosting the Government’s financial position ahead of the budget.
Exchequer returns show the Government collected €3.7 billion in corporation tax last month, up by €1.9 billion or almost 109 per cent on August 2023.
The Department of Finance said the bulk of the growth likely reflected a timing factor, with the increase offsetting a decline earlier in the year.
In the year to date, however, corporation tax receipts of €16.3 billion are still running a notable 28.4 per cent higher than they were in the same period in 2023, generating an additional €3.6 billion for the State coffers.
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Overall, tax receipts of €7.4 billion were collected in August, taking the tally for the first eight months of 2024 to €59.8 billion – up €6.7 billion or 12.6 per cent on the position last year.
The bumper nature of the corporation tax receipts yielded from a relatively small group of US multinationals in recent years has prompted the Government to repeatedly caution that this influx of tax could be a temporary windfall and should be treated as such.
The Irish Fiscal Advisory Council, in a statement posted on social media on Wednesday, noted that spending overruns were continuing to mount. Strong tax receipts “do not increase the resources available for Budget 2025″, it warned.
“Increasing net spending rapidly next year would lead to a higher cost of living and would leave the public finances more exposed in a future downturn.”
Gross voted current expenditure in the first eight months of the year arrived at €56.7 billion, up €4.9 billion or 9.6 per cent on the same period last year, with this spending also running €2.2 billion or 3.9 per cent above projections.
Despite the inherent volatility, the latest figures will still likely encourage Minister for Finance Jack Chambers to unveil a big package of spending and tax measures in his first budget on October 1st. Budget 2025 will be the last budget ahead of a general election that is expected as early as November but will be no later than March next year.
The positive trends for income tax and VAT point to an economy in robust health. The strong performance of income tax continued last month with a €2.6 billion haul, taking the total for the year so far to €22.2 billion, up €1.4 billion or 6.9 per cent on the same period in 2023.
August is not a month in which VAT is due, but figures for January to August show that receipts for this tax have reached €14.5 billion, up €1 billion or 7.5 per cent year-on-year.
The department said an exchequer surplus of €3.8 billion was recorded for the period, which compares with a deficit of €0.3 billion in the same period last year, representing an improvement of €4.1 billion.
However, it noted the annual comparison was distorted by the transfer of €4 billion to the National Reserve Fund last year. On a 12-month rolling basis, the exchequer recorded a surplus of €5.3 billion.
Peter Vale, a tax partner at Grant Thornton Ireland, said the doubling of the corporate tax take was the highlight of another good month for the exchequer.
“Given the consistently strong numbers, it is becoming increasingly difficult to identify the windfall element,” he said of the “remarkable” trend.
“There is always the caveat regarding inherent volatility given our dependence on such a small number of companies, but it looks almost certain that 2024 will be another record year for corporation tax receipts.”
Tom Woods, head of tax at KPMG, said the figures would “no doubt influence the Government’s final spending and tax plans” as it finalises the budget.
“While the signalled personal tax measures in Budget 2025 will have a positive impact on workers, we would urge the Government to also introduce effective measures to tackle the cost of doing business, and to introduce tax measures to drive the supply of affordable housing,” he said.
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