Not for the first time this year, a €1 billion year-on-year drop in monthly corporation tax receipts has prompted alarm. The State’s recent extended period of securing “windfall” income from this source appears well and truly over. The wind is now blowing in another – harsher – direction.
The €1 billion plunge in October’s corporation tax figure, a whopping 45 per cent decline on the sum collected in October 2022, is more significant, however, than the €1 billion or 36 per cent fall recorded in August.
This is not because the year-on-year trend was bigger in percentage terms last month, but because October – as well as marking the third straight month of decline, taking corporation tax receipts into negative territory for 2023 to date – is that bit closer on the calendar to November.
Indeed, it is as close as you can get to what is the key month for corporation tax each year, with both the extent and timing of October’s weakening in receipts hinting that the Government’s recent €500 million trim to its official forecast for overall 2023 tax revenues might not have been enough of a cut.
We will find out in early December if there has been a poorer-than-expected return from corporation tax this month, eroding a portion of the planned budget surplus.
Either way, there will be no repeat of the €5 billion haul from the tax recorded in November 2022. When those exceptional figures were published, the outperformance was disconcerting in its own way and helped heighten the narrative from the Government that the data was, as then minister for finance Paschal Donohoe put it, creating “an artificially positive picture of the public finances”.
Donohoe, Minister for Finance Michael McGrath and their Coalition colleagues will be hoping this month’s numbers paint a realistic picture, not an unexpectedly bleak one that makes a mockery of exchequer planning.
