Multinationals help drive State's tax revenues to a new record of €68bn

Paschal Donohoe at a press conference on the publication of the End 2021 Exchequer Statement at Government Buildings in Dublin this afternoon. Picture Gareth Chaney /Collins Photos Dublin

A huge haul from multinationals helped drive the State's overall tax revenues to a new historic level of €68.4bn last year.

The exchequer returns for December confirmed that the Government tax revenues boomed in 2021 despite the ongoing health emergency over Covid and the Omicron variant, as corporation tax revenues exceeded budget expectations by a wide margin.

Overall tax revenues of €68.4bn collected by the Government were up from €57bn in 2020 and stormed ahead of the €58.3bn in revenues collected before the pandemic in 2019, itself a record year.

Corporation tax accounted for a record haul of €15.3bn, or over 22% of all tax revenues, the Department of Finance figures show.

And the total receipts from corporation tax receipts almost matched for the first time the tax revenues collected from Vat which came in at €15.4bn.

In a non-payment month, Vat brought in only €254m in December and therefore did not reflect any potential impact from the new restrictions on hospitality introduced to curtail the spread of the Omicron variant.

However, Vat revenues for the whole of 2021 were over 24% higher than 2020, which was the first year of the severe lockdowns that affected many shops, restaurants, and pubs at the onset of the Covid crisis.

At €26.7bn, income tax revenues last year rose almost 17.5% above 2020 levels, as the wage-support and pandemic unemployment payments helped keep people in work amid the economic fallout from the Covid crisis.

Excise duties brought in over €5.8bn last year, an increase of over 7% from 2020.

The huge tax revenues mean that the budget deficit has shrunk dramatically. The Department of Finance said that it estimates a Government budget deficit of around €9bn last year -- equivalent to 4% of the adjusted GNI* measure, which most accurately reflects the output of the domestic economy.

"The improvement in the deficit from the budget estimate of €13.25bn is primarily the result of a significant under-spend in net voted public expenditure as well as better than expected tax receipts," the department said.

On the much-higher-than-expected corporation tax revenues, Finance Minister Paschal Donohoe said the bounty would unlikely continue.

"It is highly likely that, at some stage, these receipts will decline. This is why we must ensure prudent management of the public finances so that we are not left with a structural gap between revenue and expenditure in future years,” he said.