Government takes in near record €2.7bn in corporation tax in November
Latest exchequer returns for November show no let up in windfall from business tax
Minister for Finance Paschal Donohoe. the State could yet run a budget surplus for 2018.
The Government took in a near record €2.7 billion in corporation tax in November, nearly half a billion more than expected.
Exchequer returns for the first 11 months of the year show receipts from the business tax are now €9.4 billion for the year, 20 per cent ahead of the Government’s target.
The total for 11 months is also ahead of last year’s record €8.2 billion haul. Corporation tax receipts have doubled since 2015 amid a massive transfer of assets here in the wake of a clampdown on multinational tax avoidance and increased corporate profitability.
“November is the largest corporation tax collection month of the year and receipts were once again very strong, reflecting, in part, higher levels of corporate profitability in the economy,” the department said.
The highly concentrated nature of the tax base leaves the exchequer here exposed to changes in the international business environment. And the Government has been warned not to use the current windfall to fund permanent spending measures.
Nonetheless it may see the Government run a budget surplus for 2018 for the first time since before the financial crisis.
The latest exchequer numbers show the Government’s overall tax take for the year, at €51.4 billion, is now €1.2 billion or 2.4 per cent ahead of target.
Income tax, the Government’s largest tax category, generated just under €19.5 billion, which was marginally below target for the year but nearly €1.2 billion or 6.4 per cent up on last year, reflecting the strong level of employment growth in the economy.
VAT, which reflects conditions in the retail sector and consumer spending generally, came in ahead of target at €14 billion for the year, and generated nearly €2.3 billion in the month of November alone.
The one weakness was excise duty, which came in €319 million or 6 per cent below profile at €5 billion. This was blamed on retailers stockpiling tobacco imports ahead of the introduction of plain packaging on cigarettes.
The figures pointed to an exchequer deficit of €1.9 billion for November, compared to a surplus of €4.6 billion for the same period last year. When adjusted for the impact of the AIB share sale in 2017, the exchequer balance shows an underlying annual increase of €757 million.
This improvement in the exchequer balance was primarily due to increases in tax and non-tax revenue, albeit somewhat offset by increases in expenditure, the department said.