Tax take jumps 13% this year with August seeing another surge in corporation tax receipts

Healthy tax receipts a month before the budget comes with warnings from advisory bodies about overheating the economy

Minister for Finance Jack Chambers. Total Government expenditure during the first eight months of the year totalled €69.1bn. Pic: Orla Murray

Corporation tax receipts in August doubled compared to last year driving up Government revenue by over 40% to €7.4bn during the month, the latest Exchequer results shows, as preparations for the Budget next month continue.

Last month, corporation tax receipts alone increased by €1.9bn to €3.7bn - a 108.7% increase. The Department of Finance said the bulk of this monthly growth likely reflects a “timing factor, with the increase offsetting a decline earlier in the year”.

Finance Minister Jack Chambers said despite the timing issue around the corporation tax take, “this revenue stream is now well ahead of last year”.

“However, as I have cautioned previously, these receipts are clearly subject to exceptional volatility. Put simply, there is no guarantee that these revenue streams will remain at this level indefinitely, and it is crucial that we do not build permanent spending commitments on the back of these,” he said.

Income tax receipts increased by €100m in August to €2.6bn.

Vat was not due in August with just €400m collected, up €100m compared to last year. Approximately €500m was collected in excise duties - up €45m.

So far this year, corporate tax receipts of €16.3bn have been collected, up by €3.6bn while €22.2bn worth of income tax receipts have been collected, an increase of €1.4bn. Vat collection so far has totalled €14.5bn - up €1bn - while excise duties are up €500m to €4.1bn.

Total tax receipts collected this year has totalled €59.8bn which is €6.7bn higher than the same period last year - a 12.6% increase. Gross revenue as of the end of August stood at €72.9bn - up €6.8 billion year-on-year.

Total Government expenditure during this period totalled €69.1bn.

A surplus of €3.8bn was recorded in the year up to the end of August. This compares to a deficit of €300m in the same period last year, however, this comparison is distorted by the transfer of €4bn to the National Reserve Fund.

These Exchequer figures are the last before the budget on October 1.

Yesterday, the Irish Fiscal Advisory Council (Ifac) criticised the Government’s Budget plans saying the expected spending splurge will be more costly for households in the long-run.

The State’s budgetary watchdog has warned that breaches of the Government’s own 5% spending rule will raise consumer prices and add €1,000 to households' yearly outgoings.

Ifac was overall optimistic about the performance of the “strong” Irish economy on the condition that the Government does not overheat it with “extra stimulants”.

In response to Ifac’s comments, Mr Chambers said the Government’s planned spending growth for this year is “pretty much in line with what it was last year”.

“There's been increases on the cost of providing the existing levels of service, in terms of the inflationary environment and the cost of providing public services, and the additional capital spend we've had, has resulted in us increasing beyond the 5% to 6.9%,” he said, adding that its Government’s role to strike a balance in spending during the budget.