Employment and spending boosted taxes in the first five months of the year, new figures show, but experts warn that rising costs are pushing businesses to a “cliff edge”.
The Government collected €49.2 billion in revenue in the year to the end of May, €700 million less than during the same five-month period in 2025, according to exchequer returns detailing State income and spending published on Thursday.
Income tax and VAT, levied on consumer spending, together accounted for €27.85 billion of the total, some €1.9 billion more than the contribution from workers and shoppers during the same five months last year.
Workers paid €15.6 billion tax on their pay over the five months, €1 billion more than during the same period in 2025. VAT climbed €800 million to €12.2 billion.
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Those figures show employment and spending “holding up well” said Alma O’Brien, head of tax at advisers Azets Ireland.
But she cautioned that the Middle East conflict, which has sent energy prices soaring, could damage the Irish economy if it persists.
Many small and medium-sized businesses (SMEs) face significant challenges posed by rising costs, she noted.
“While next month’s VAT cut for the hospitality sector provides breathing room for some firms, more supports may be needed to avoid a cliff-edge scenario for SMEs in other sectors under pressure,” O’Brien warned.
Corporation tax, levied on company profits, rose €516 million in the year to the end of last month to €6.2 billion. That represented an increase of 9.1 per cent.
Excise duty tumbled almost €100 million to €2.5 billion to the end of May.
The fall could be due to Government tax cuts on diesel and petrol announced following widespread protests at soaring motor fuel price rises in April, a Department of Finance statement said. Excise is collected on motor fuel, alcohol and tobacco.
Government spending surged to €51.5 billion in the five-month period, the figures show, leaving the State nursing a €2.3 billion deficit on May 31st.
Minister for Finance Simon Harris argued the growth in income tax and VAT showed the success of the Government’s strategy to protect jobs during uncertainty.
Next October’s budget will include tax cuts for workers, Harris hinted.
