Government on track for record tax levies despite surging inflation – The Irish Times

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Rising corporate tax revenues, along with strong growth in income tax and VAT, have put the government on track for record tax take this year.

The figures, released this afternoon by the Ministry of Finance, show that tax receipts for the 10 months to the end of October amounted to almost 64 billion euros. This is 13 billion euros, or 25% more than the same period last year, which suggests that the economy is still doing well despite the corrosive impact of inflation.

Total tax revenue for the year is now expected to top €80 billion for the first time.

The good numbers were driven by a record corporate tax revenues, which amounted to 16.2 billion euros for the 10-month period, ie 6.6 billion euros more than in the same period last year. The business tax brought in 2.3 billion euros in October alone, or 800 million euros more than in the same month last year.

“This increase is primarily in the profits of a small number of companies in the multinational sector, which are unlikely to be repeated next year,” the department said. The concentrated nature of the corporate tax base here, with just 10 companies accounting for 60% of revenue, has been repeatedly highlighted as a potential risk.

The state fiscal position was also boosted by strong income tax revenues, which on a cumulative basis amounted to €23.9 billion at the end of October. This was 3.2 billion euros, or 15%, more than the same period last year, reflecting strong employment growth.

VAT revenue for the year to date amounted to €15.5 billion, an increase of €2.9 billion, or 23%, compared to the same period in 2021, reflecting the rebound in retail spending since Covid. However, the department warned that there was a significant base effect in the VAT figures “as the economy was still stuck in the early months of 2021, driving down VAT receipts and flattering the comparison”.

The higher-than-expected figures generated a Treasury surplus of 7.3 billion euros in October, a reversal from a deficit of 7.4 billion euros at the same time last year, equivalent a year-on-year improvement of nearly €15 billion.

On the spending side, current spending was €61 billion for the 10-month period, €1.3 billion ahead of profile, reflecting included cost of living measures. in the budget and cost of housing refugees from the war in Ukraine.

“The figures show that tax receipts remain strong at the start of the fourth quarter,” said Finance Minister Paschal Donohoe. “However, the strength of potentially volatile corporate tax revenues continues to paint an artificially positive picture of public finances.

“As I have warned many times, while this revenue is welcome, it is imperative that this government does not make permanent budgetary commitments on the basis of revenue that may prove transitory,” he said. he declares.

Public Expenditure and Reform Minister Michael McGrath said the spending figures reflected increased funding provided by the government throughout the year to support public services, households and the economy.

“It demonstrates a responsive approach to the external challenges facing our economy and society, including the ongoing response to Covid-19, the war in Ukraine and the rising cost of living,” he said.

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