Tax receipts in Ireland rose 27% to €30.1 billion in the five months to the end of May, according to the latest exchequer returns from the country’s Department of Finance.
An Exchequer surplus of €1.4 billion was recorded at end-May 2022, compared with a deficit of €6 billion for the same period last year.
“The €7.4 billion improvement in the Exchequer balance was primarily driven by strong growth in tax revenue, with tax receipts of €30.1 billion to end-May, up €6.4 billion on an annual basis,” said the Department of Finance.
“The annual increase is, however, flattered by the stringent level-5 restrictions that were in place in the opening months of last year as well as a number of other technical factors.
“On a 12-month rolling basis, a better indicator of the trend, the Exchequer accounts were essentially in balance (surplus of c. €32 million).”
Income tax receipts remain robust at €11.9 billion to end-May, up 17% on last year.
VAT receipts to the end of May amounted to €9 billion, up almost 29% on the same period last year, reflecting the recovery in consumer spending.
“However, the annual comparison is impacted by a number of factors including the public health restrictions that were in place last year,” said the Department of Finance.
“In addition, VAT receipts are boosted by the impact of tax warehousing last year and the standard rate of VAT was also lower in the opening months of 2021.
“That said, VAT receipts were 23% higher than in the same period in 2019 (that is, pre-pandemic).”
At €2.1 billion to end-May, excise duty receipts were up 2% on an annual basis.
Corporation tax receipts amounted to €5.2 billion to end-May, up €2.3 billion on last year although the Department of Finance said this reflects “in part, a timing issue.”
Total gross voted expenditure to end-May amounted to €31.8 billion, €1.2 billion or 3.5% below the same period in 2021.
This wasdriven by a decline in expenditure in the Department of Social Protection due to the impact of COVID-19 restrictions in early 2021 and the resulting increased expenditure on supports for people and businesses.
The Department of Health expenditure was at almost €9 billion to end-May, reflecting the prevalence of COVID-19 during the earlier part of the year.
Minister for Finance Paschal Donohoe said: “Today’s figures show that tax receipts remain robust with strong growth evident in the vast majority of tax heads.
“While the annual comparisons are distorted due to a number of factors, in particular the public health restrictions that were in place last year, the underlying trends are a good signal of the continued momentum in the domestic economy.
“However, given global inflationary pressures, monetary policy may become less accommodative going forward.
“Indeed, we can no longer assume that the highly favourable interest rate environment that has prevailed recently will continue.
“What is clear is that the higher our level of public debt, the more severe the implications of any rise in borrowing costs will be.
“We also know that our prospects for affordable borrowing costs are improved with careful management of the public finances.
“It is crucial that we use the strong momentum in the public finances to rebuild and reinforce our fiscal buffers so that, in this ever more uncertain world, we retain our ability to swiftly and effectively respond to future shocks.
“There are many challenges to meet, but there are also opportunities to seize, if we make the right decisions now.”