Surging corporation and income tax receipts have boosted the State’s financial position, handing the Government the means to deliver a giveaway budget before the next general election.
Despite repeated warnings about the potential volatility of multinational profits, corporation tax receipts have continued to grow, with half-year exchequer returns published on Wednesday showing the tax generated €5.9 billion in June, up by €1.6 billion, or 38 per cent, on the same month last year.
Corporation tax receipts for the year now stand at €12.2 billion, up €1.6 billion (15 per cent) on the same period last year.
The June receipts generally reflect companies with financial years ending in December which include several big players in the tech sector here, among them Google, Meta, Microsoft and Intel.
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Overall, the latest exchequer numbers show the Government took in a total of €44.7 billion in tax across all headings in the six months to the end of June, up some €3.8 billion or 9 per cent on the same period last year.
Senior Government figures acknowledged the buoyant tax returns were likely to fuel political demands on Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe for a big giveaway in the autumn budget. The first indications of that will be when the two Ministers deliver the Summer Economic Statement next week, which will set the fiscal parameters for Budget 2025.
[ Exchequer returns cap transformative week for new finance minister Jack ChambersOpens in new window ]
[ Chambers warns ministers as spending pressures build ahead of budgetOpens in new window ]
Speaking to The Irish Times on Wednesday, a number of Government backbenchers indicated several areas in which they would be seeking extra spending. Veteran Fine Gael TD Charlie Flanagan called for cuts in inheritance tax and investment in defence, while his colleague Brendan Griffin said he would be seeking the restoration of the 9 per cent VATrate for the hospitality industry as well as a reduction in universal social charge. Fianna Fáil’s Cormac Devlin said he wanted to see a tax package for workers, an increase in the State pension and supports to deal with continuing cost-of-living pressures.
However, it is around the Cabinet table that Mr Chambers and Mr Donohoe will feel the fiercest pressure for spending increases and tax cuts as Ministers prepare to pitch their requests for departmental spending hikes.
On Tuesday night, in a statement issued after a meeting with representatives of the banking industry, Taoiseach Simon Harris pledged further cost-of-living supports. “The Government will continue to help with the cost of living, with more measures to take effect in September and to be announced in the forthcoming budget,” he said.
Speaking at the publication of the figures, Mr Chambers said June was a key month for tax revenues and the strong performance was a “welcome indicator” of the health of the economy.
“That said, there has been considerable volatility – in both directions – in corporation tax revenues over the last number of months, underlying the need to treat around half of these receipts as windfall in nature,” he said.
Government coffers were also buoyed by strong income tax receipts, which generated €2.8 billion in June and €16.7 billion for the year so far, €1.2 billion higher than the same period last year. VAT receipts, an indicator of consumer spending, were €11 billion for the six-month period, 6.2 per cent higher than last year.
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