Government collects tax haul of €52bn but Finance Minister cautious on corporation tax revenue

Finance Minister Jack Chambers gave a cautious outlook on receipts collected from multinationals. Picture: Damien Storan

The Government collected a tax haul of more than €52bn in the first seven months, up €10bn annually, as corporation taxes again delivered despite July not being a key month for this revenue stream.

Corporation tax returns were 15% ahead of last year at €12.5bn, giving the Government a bump in the final months before the budget is finalised.

However, these receipts have often been referred to as volatile and the budgetary watchdog Ifac has previously warned finance ministers about the dependence on corporation taxes when preparing budgets.

Peter Vale, tax partner at Grant Thornton Ireland, also voiced concern about the reliance of corporation taxes, especially in a changing economic and political environment.

“A recession in the US or a broader global economic downturn would almost certainly impact on corporate tax receipts, in particular given our reliance on such a small number of multinationals,” he said.

“While a recession still appears unlikely, corporate tax receipts in the key month of November would be impacted in such an event,” said Mr Vale.

Finance Minister Jack Chambers gave a cautious outlook on receipts collected from multinationals and said while the latest figures showed a “significant increase” in corporation tax, Ireland was in a similar position last year "with corporation tax performing very strongly, but this was followed by consecutive months of sharp declines in this revenue stream”. 

Exchequer returns published by the Department of Finance showed the State collected €7.6bn in July, an increase of more than 10% on the same month last year.

Growth in the other three of the so-called "big four" revenue streams of Vat, income tax and excise duties was also recorded in the first seven months.

“The July exchequer returns largely continue the trends seen in the year to date, with robust income tax and Vat revenues providing further confirmation of the underlying strength of our economy," said Mr Chambers.

Vat falls due in July which drove receipts up almost 10% to €3.2bn compared to the same month in 2023. Vat receipts from the start of the year to the end of July reached €14.2bn, up 7% on the first seven months of 2023.

Income tax receipts continued steady growth last month, and cumulative receipts to end-July were €19.6bn, up by €1.4bn, reflecting the a tight labour market.

Excise duties receipts collectively jumped almost 15% to nearly €4bn by the end of July.

The Government has recorded an exchequer surplus of €3.4bn to end-July, up from €2.6bn on the same period last year, although the year-on-year comparison is distorted by the transfer to the National Reserve Fund last year.

The Exchequer returns also showed a annual increases in spending in a number of sectors, including housing, health and social protection amid chronic demand for supply and services in these areas.

There was an increase of almost €6.5bn, or 13.2%, in total gross voted expenditure in comparison to the same period in 2023.

Housing expenditure jumped by €1.7bn, or 75.3%, more than July last year as Government races to address housing shortages ahead of an election. Health was 13.3% higher at €1.7bn and social protection climbed upwards 6.3% to €900m.

Mr Vale said it was "overall, another good month for the exchequer," but said "there will be nervousness at the impact of ongoing global economic uncertainty on future returns".