The Exchequer recorded a surplus of €6.3bn at the end of August, marking a €13bn improvement and a complete turnaround from the €6.7bn deficit reported in August 2021.

On a 12-month rolling basis, the Exchequer surplus stands at €5.6bn, reflecting strong growth in tax revenues and a decline in voted current expenditure following the winding down of Covid-19 supports.

Gross revenues for the first eight months of the year totalled €66.1bn, an increase of 12.3% year-on-year.

Tax revenues of €49.8bn, up 26.3% or €10.4bn from the same period of last year, were driven by strong growth in income tax, VAT and corporation tax.

Tax revenues of €6.4bn were collected in August, up by €2.1bn, the bulk of the increase driven by corporation tax, which was ahead year-on-year for the month by €1.7bn.

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Corporation tax receipts for the first eight months of the year now stand at €11.8bn, which is over €4.8bn ahead of the same period last year.

The Department of Finance attributed the surge to “significant increases in profitability in the multinational sector”.

Tom Woods, Head of Tax in KPMG Ireland, commented: "Cumulative corporation tax receipts are 68.5% higher than last year. While some of the gains may be due to early payments of corporation tax, it appears likely that receipts will be considerably higher than last year.  We will have better visibility of the corporation tax trend in November which is the most significant month for corporation tax payments."

Income tax receipts for August amounted to €2.4bn, an annual increase of 9.4%. On a cumulative basis, income tax receipts stand at €19.2bn, which 16% ahead of the same period in 2021.

August is a non-VAT-due month, with just €300m collected in the period. Cumulative VAT receipts stand at €12.2bn, an increase of 24% on the same period in 2021.

The Department of Finance commented: “There is a significant ‘base effect’ in the cumulative VAT figures, as the economy was still in lockdown through the early months of 2021, depressing VAT receipts and flattering the comparison.”

KPMG's Tom Woods observed: "Cumulative income tax receipts are 16% ahead of last year representing a return to near full employment and wage inflation.

"August is not a VAT payment month so it is difficult to determine the extent to which inflation has impacted consumption in the domestic economy. We will have a better sense of this next month.” 

Peter Vale, tax partner at Grant Thornton, said the latest Exchequer figures “show the remarkable resilience of the Irish economy”.

Vale added: “August is a quiet month on the VAT front but there were some signs in the July returns of a levelling off in VAT receipts. Price inflation, and interest rate increases, will have an impact on disposable income and it would not be a surprise to see a consequent impact on VAT receipts later in the year.

“While the strong Exchequer position is likely to facilitate income tax cuts later in the month in Budget 2023, any cuts are likely to remain relatively modest, certainly in the context of cost of living increases."

Earlier on Friday, Minister for Finance Paschal Donohoe said the government is committed to tackling cost-of-living challenges in the forthcoming budget and "will set out a range of supports to help alleviate the inflationary pressures on society.  

"In doing so we must strike a balance between protecting the most vulnerable households and firms from a once-in-a-generation energy price shock, while at the same time ensuring that policy doesn’t worsen the inflationary cycle.”

He also took note of evidence of economic growth in the CSO's quarterly national accounts for Q2, saying it was encouraging to see that consumers "were uninhibited by pandemic related restrictions" and the related "rebound in activity."

"Despite the strong rebound in activity evident in today’s figures, I am conscious that a number of indicators suggest that momentum has eased in the third quarter while the outlook over the coming quarters has weakened considerably," Donohoe contunued.  

"Global inflationary pressures, resulting from the surge in energy prices from Putin’s war, are eroding real incomes and undermining growth prospects both domestically and in our main trading partners."