Corporation tax receipts have surprised on the upside again, defying predictions of a slump and pointing to another strong year for the public finances.
Alarm bells had been ringing in the Department of Finance after receipts from the business tax fell for three consecutive months between August and October, posing a risk to the Government’s budgetary arithmetic.
However, the latest exchequer returns show the Government collected a record €6.3 billion in corporate tax receipts in November, which was €1.3 billion or 27 per cent higher than the amount collected in the same month last year.
It brought corporate tax receipts for the year to date to €22 billion, 4.2 per cent up on last year, and on course to exceed the Government’s €23.5 billion forecast, which had begun to look shaky in recent months.
November is the biggest month of the year for corporate tax as most companies with a December financial year-end make a preliminary payment.
The strong performance was linked to better-than-expected earnings in the tech sector with Meta, Google and Intel, which are among the biggest taxpayers here, posting stronger earnings estimates for the year as a whole.
“The stand-out feature of the November performance is, of course, corporation tax: after three months of decline, a large increase in receipts this month means this revenue stream is once again comfortably ahead of last year,” Minister for Finance Michael McGrath said.
“However, it is crucial to place this in context. While corporation tax is now 4 per cent ahead of 2022, it is clear that the era of persistent over-performances is coming to an end,” he said.
Labour Party finance spokesman Ged Nash said: “We were being conditioned by government to expect bad news. It is without doubt good news for our country that the recent slide in Corporation Tax returns has been reversed.
“We cannot be in any way complacent. We are still far too reliant than is healthy on a small number of multinationals for a disproportionately large quantum of our business tax take and indeed on the income tax side too in terms of high-quality, skilled jobs.
November is also key month for income tax as it incorporates returns from self-assessed taxpayers.
The latest figures showed income tax also held up strongly, generating receipts of €4.6 billion last month, up €300 million 5.7 per cent on the same month last year.
On a cumulative basis, income tax brought in just over €30 billion, which was €2.1 billion (7.3 per cent) ahead of the same period last year, and reflective of the current strength of the labour market.
The Government’s other main tax channel, VAT, also performed strongly generating receipts of €3.1 billion in November and €20.1 billion for the year to date, up €1.6 billion (8.6 per cent) on the same period last year.
Overall, an exchequer surplus of €5.4 billion was recorded in November. This compares with a surplus of €12.1 billion in the same period last year, with the deterioration driven by a number of factors including increased public expenditure and the transfer of €4 billion to the National Reserve Fund (NRF) in February.
Sinn Féin welcomed the increased tax take but finance spokesman Pearse Doherty said the unexpected boon underlined “the caution with which corporation tax receipts should be treated given their volatility”.
Labour Party finance spokesman Ged Nash said the country was “far too reliant” on “a small number of multinationals” for both business tax and income tax.
“We are extremely vulnerable to decisions made in boardrooms in the US,” he said.
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