Robust tax revenues in May, increased expenditure shows continued investment in infrastructure and public services

6th June, 2024

  • Today’s Exchequer figures show that tax revenues to end-May were up on last year by €2.1 billion or 6.2 per cent, driven primarily by a strong performance in VAT and corporation tax;
  • Income tax receipts in the period of €13.9 billion are up on last year by €0.9 billion or 6.7 per cent; 
  • VAT receipts of €10.8 billion are €0.8 billion or 8.0 per cent up on the same period in 2023;
  • Corporation tax receipts of €6.3 billion are level with last year;
  • Total gross voted expenditure in the period amounted to €38.8 billion, €5.0 billion or 14.7 per cent above the same period in 2023 and €1.0 billion or 2.6 per cent above profile;
  • An Exchequer surplus of €0.8 billion was recorded to end-May: this was an improvement of €1.4 billion on last year, albeit the year-on-year comparison is skewed because of the transfer of €4 billion to the National Reserve Fund last year.

 

Tax receipts of €35.2 billion were collected in the first five months of the year, up by €2.1 billion or 6.2 per cent on the same period last year. For the month of May, receipts of €10.4 billion were up by €1.4 billion or 15.9 per cent on last year, with strength across the main revenue streams and in particular VAT and corporation tax.

 

Income tax receipts in May of €2.7 billion were up by 0.1 billion or 5.2 per cent on May last year, continuing the trend of steady growth in this tax head. On a cumulative basis, receipts of €13.9 billion are up on last year by €0.9 billion, or 6.7 per cent.

 

May is a VAT-due month, with receipts of €3.4 billion collected, representing strong growth of €0.4 billion or 12.1 per cent on last year. Cumulative VAT receipts of €10.8 billion now stand €0.8 billion, or 8 per cent, up on the same period in 2023.

 

May has been a significant month for corporate tax receipts, with €3.6 billion collected, €0.8 billion ahead of May last year. This means that on a cumulative basis revenues have now recovered after a Q1 decline and are now broadly level with the same period last year, at €6.3 billion.

 

Total gross voted expenditure to end-May amounted to €38.8 billion, €5.0 billion or 14.7 per cent above the same period in 2023 and €1.0 billion or 2.6 per cent above profile. 

 

An Exchequer surplus of €0.8 billion was recorded to end-May, an improvement of €1.4 billion on end-May 2023. However, the comparison is distorted because of the transfer of €4 billion to the National Reserve Fund in the first quarter of last year, which artificially depressed the 2023 position and flatters the year-on-year swing.

 

Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said: 

 

“May is an important month for tax revenues in the exchequer calendar and the positive performance is a welcome indicator of the strength of our economy, most clearly reflected in the healthy growth in income tax and VAT revenues. With a record 2.71 million now at work in Ireland and incomes rising faster than the rate of inflation, living standards are improving again and consumer activity in our economy is being supported. 

 

Of course, the most notable feature of the May tax outturn is the spike in corporation tax receipts. As a result, overall corporate tax revenues have recovered after a sharp drop in the first quarter of the year and are now level with the same period last year.

 

I would caution, however, that the significant volatility, in both directions, we have seen from month-to-month in this revenue stream is yet more evidence of the unreliability of these highly concentrated receipts, and the associated risks this brings to our public finances. 

 

The fact that we are highly dependent for a large portion of our corporate tax receipts on a very small number of companies requires a decisive policy response to ensure our public finances are sustainable into the future. We cannot necessarily rely on some of these receipts into the future. That is why the setting up of the Future Ireland Fund, and the Infrastructure, Climate and Nature Fund is a landmark and necessary policy development and one I am determined to deliver on. 

 

This vulnerability underscores the importance of continuing to pursue a balanced and sustainable budgetary policy. With this in mind, Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement in the coming weeks.”

 

 

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

 

“End May gross expenditure of €38.8 billion reflects Government’s investment in the delivery of better public services and infrastructure. Capital spending levels reflect the continued rollout of our National Development Plan, with end May expenditure of €3.6 billion showing a 52% increase in capital investment over the same period last year. The significant strides are evident in figures for Housing, Local Government and Heritage with capital expenditure of €1.2 billion showing an increase of €731 million or 155% year-on-year.

 

“Current expenditure figures reflect measures introduced in Budget 2024, including Social Protection rate increases and the improvement of public services as we support our growing population. Despite these investments, emerging expenditure risks necessitate careful management of spending by all Departments. This vigilance will ensure that we are able to maintain sustainable public services for our society and is essential in preserving our decision-making flexibility for Budget 2025.”

 

ENDS