Corporation tax drives revenue over-performance in first half of the year – Ministers Chambers & Donohoe

3rd July, 2024

  • Today’s Exchequer figures show that tax revenues in the first half of the year were up on last year by €3.8 billion (9.3%);
  • Strong performances were recorded in all three of the largest tax headings, namely income tax, VAT and corporation tax;
  • The stand-out figure was the €12.2 billion of corporation tax revenue, a 15.4 per cent increase on the same period in 2023;
  • Total gross voted expenditure in the period amounted to €47.1 billion, €5.2 billion (12.4 per cent) above the same period in 2023 and €1.5 billion or 3.3 per cent above profile;
  • An Exchequer surplus of €3.1 billion was recorded in the first half of the year;
  • While this was an improvement of €2.8 billion on last year, the annual year comparison is skewed by the transfer of €4 billion to the National Reserve Fund last year.

 

Tax receipts of €9.6 billion were collected in June, up by €1.8 billion (22.6 per cent) on last year, with all the main revenue streams performing well.  As a result, tax receipts of €44.7 billion were collected in the first half of the year, up by €3.8 billion (9.3 per cent) on the same period last year.  

 

In terms of the individual tax headings, income tax receipts in June amounted to €2.8 billion, up by €0.3 billion (11.5 per cent) on June last year.  On a cumulative basis, income tax receipts in the first half of the year were €16.7 billion, up €1.2 billion (7.5 per cent) on the same period last year, consistent with solid employment growth.  Income tax receipts are slightly ahead of target.

 

June is a non-VAT-due month and receipts of €0.1 billion were, accordingly, relatively minor.  On a cumulative basis, VAT receipts amounted to €11.0 billion in the year to end-June, €0.6 billion (6.2 per cent), up on the same period in 2023; this is broadly in line with expectations.

 

June saw exceptionally strong corporation tax growth, with receipts of €5.9 billion collected, €1.6 billion (38.2 per cent) ahead of last year.  In the first half of the year, total corporate tax receipts were €12.2 billion, 15.4 per cent ahead of last year and are also ahead of profile. 

 

In aggregate terms, tax receipts at end-June are now ahead of expectations, with the over-performance largely due to corporation tax receipts.

 

Total gross voted expenditure in the first half of the year amounted to €47.1 billion, €5.2 billion or 12.4 per cent above the same period in 2023 and €1.5 billion or 3.3 per cent above profile. 

 

An Exchequer surplus of €3.1 billion was recorded in the first half of the year.  While this was an improvement of €2.8 billion on the first half of last year, the annual comparison is skewed due to the transfer of €4 billion to the National Reserve Fund in the first half of 2023.

 

Commenting on the figures, the Minister for Finance, Jack Chambers T.D. said: 

 

“June is a key month for tax revenues and the strong performance across the first half of the year is a welcome indicator of the health of our economy, most clearly reflected in the robust growth in income tax and VAT revenues.

 

“The stand-out feature is undoubtedly the sharp spike in corporation tax receipts in June, which means that in the year to date, this revenue stream is well above its level in the same period last year. 

 

“That said, there has been considerable volatility – in both directions – in corporation tax revenues over the last number of months, underlying the need to treat around half of these receipts as windfall in nature.  There is also overwhelming evidence that confirms the highly concentrated nature of these receipts.

 

“The two new investment vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund –  signed into law last month will help us to address some of the risks around windfall tax revenues, but this must be coupled with a balanced approach to budgetary policy.  With this in mind, Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement, which will be published next week.”

 

The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D. said:

 

“Gross Expenditure of €47.1 billion in the first half of 2024 continues to demonstrate the substantial investment in our public services. Spending figures to end June reflect the impact of Budget 2024 measures such as enhanced social protection payments and the continued expansion of supports and services in Health, Housing, Education and Childcare sectors. 

 

Today’s figures show that capital expenditure remains on an upward trajectory, increasing by €1.6 billion or over 50 per cent compared to the same time-frame last year. This expenditure is delivering increased investment in our schools, housing, and transport infrastructure.

 

The end June spending figures are a reminder to Departments of the importance of staying within budget and I will continue to engage with my colleagues across Government to ensure enhanced expenditure management in the period ahead.”

 

ENDS

 

Fiscal Monitor June 2024