Tax burden increases by 12.5% year-to-date

/ 2nd March 2023 /

The tax burden on the Irish economy has increased by 12.5% year-to-date compared with the first two months of 2022, according to Exchequer figures.

Income Tax receipts were 7.5% higher year-on-year for the two month period, and on an an underlying basis VAT receipts increased by 15% compared to end-February 2022.

Corporation Tax receipts were up €300m compared with the same period last year.

Meanwhile, public spending also boomed, up 6.5% year-on-year.

Finance minister Michael McGrath (pictured) commented: “Today’s figures show that tax receipts continued to record robust growth in the opening months of this year.

“In particular, the solid growth in income tax and VAT receipts are a positive signal of the resilience of the domestic economy, and underline the strong employment performance with almost 2.6 million people now at work."

Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe, stated: “Over €12 billion has been spent across all government departments to end February 2022. We spent almost 26% more on capital in the first two months of 2023 in comparison to 2022.

“This demonstrates the continued progress of the ambitious National Development Plan including providing more schools and classrooms, supporting the retrofitting of houses and the rollout of the National Broadband Plan.”

Peter Vale, tax partner in Grant Thornton, remarked that a key focus in February was on income tax, which finished the month 5% ahead of the 2022 comparable.

“This represents a slowdown on the growth seen to date, although the labour market remains tight with record numbers in employment. March numbers will provide a better indication as to how income tax figures will trend for the full year,” he said.

“In summary, two solid months to start the year for the Exchequer and good signs for the year ahead, despite a slight weakening in income tax receipts."

Tom Woods, head of tax at KPMG, commented: “The extra €1.3 billion in tax collected to date in 2023 represents a positive start to the year.

“While inflation and a tight labour market are contributing to the extra tax collected, we can’t lose sight of the economic value of consistent, strong tax receipts.”