New Exchequer figures show that tax revenues to end-September increased by 26% year-on-year to €57.9bn, though the government insisted that the annual comparison is flattered by its Covid lockdowns in the opening months of 2021.
Corporation tax receipts were €13.8bn to end-September, a huge annual increase of 70%.
The Department of Finance commented: “The annual increase in corporation tax reflects the continued strong momentum in activity in the multinational sector.”
Corporation tax receipts of €2bn were collected in September, up almost €1bn compared with the same period month last year.
“This increase primarily relates to payments made this year on 2021 profits and therefore is not expected to carry forward into 2023 receipts,” said the department, without rational explanation.
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Finance minister Paschal Donohoe (pictured) insisted that the strength of "potentially volatile" corporation tax receipts provides "an artificially positive picture" of the public finances.
“These receipts are highly concentrated among a small number of companies and, as such, are subject to extreme potential volatility and cannot be guaranteed at current levels into the future,” he stated.
The minister added that department officials estimate that ‘excess’ corporation tax receipts - i.e. the amount that cannot be explained by underlying drivers - could amount to somewhere in the region €8-10bn for 2022.
“If these ‘windfall’ receipts were excluded a significant deficit would be in prospect this year,” said Donohoe.
“In order to rebuild our fiscal buffers we will start replenishing the National Reserve Fund with some of these excess receipts. This year €2bn will be directed into the Fund. Next year, €4bn will be transferred.”
Income tax receipts to end-September amounted to €21.4bn, up 16% on an annual basis.
Peter Vale, tax partner at Grant Thornton, observed: “What will arguably please the government most is that despite evidence of a slowdown in hiring across the technology sector in particular, income tax figures for September remain strong, 15% ahead of the same month in 2021."
Surge in VAT receipts too
VAT receipts to end-September were €15.3bn, up almost 23% on an annual basis, and up 24% on the same period in 2019 pre-pandemic.
The VAT outturn will dismay tourism and hospitality sector firms who have been told that the rate of sales tax levied on their turnover will increase by 50% from 9.0% to 13.5% from March 2023.
Tom Woods, head of tax in KPMG, stated that despite the fall in consumer confidence, VAT receipts appear to be benefiting from price inflation.
Peter Vale added: "While there were signs previously of a levelling off in the VAT figures, the numbers today show that consumer spending remains strong, with figures for the month 19% ahead of September 2021. Given the uncertain economic environment and interest rate increases, this is quite remarkable."
Capital gains tax receipts remain buoyant too, with €590m collected by Revenue in the first nine months of 2022 compared with €330m in the corresponding period in 2021.
At €4bn to end-September, excise duty receipts were down 2% on an annual basis. The decline reflects a reduction to fuel excise duty to cushion motorists from higher petrol and diesel costs.
An Exchequer surplus of €7.9 billion was recorded to end-September. The is the amount of excess government income over its expenditure, and shows why Budget 2023 measures broke with recent precedent.
Total gross voted expenditure to end-September was €59.2bn, down 2.4% year-on-year due to winding down of Covid supports.
Gross Voted Current Expenditure was €850m ahead of envisaged when Budget 2022 was framed a year ago, due to larger than expected Covid-related expenditure this year and costs associated with accommodation for Ukrainian refugees.
