Corporation tax receipts slump as Exchequer takings total €61.4bn

Muireann Duffy

A €0.6 billion (4.4 per cent) increase in corporation tax takings to the end of the third quarter of the year brought a note of warning as the Department of Finance warned the €14.4 billion figure was €0.7 billion behind projections for the year.

The Exchequer figures published on Tuesday showed corporation tax declined for a second consecutive month in September.

Overall, the Exchequer took in €61.4 billion in taxes to the end of Q3, which was up 6 per cent (€3.5 billion) on 2022's figure.

Income tax accounted for €23.1 billion, showing an 8 per cent increase on last year. VAT takings had a slightly better rise, jumping 10 per cent (€1.5 billion) from last year to total €16.8 billion.

The figures also showed total gross voted expenditure was €64.4 billion for the period, €5.2 billion (8.7 per cent) over the amount spent in the same timeframe in 2022.

All in, a surplus of €1.1 billion was noted to the end of the quarter, which was almost €7 billion below last year's surplus to the same point.

Pointing to the decline in corporation tax takings, Minister for Finance Michael McGrath said the figures highlighted the need for caution as the Government finalises Budget 2024, which will be unveiled on Tuesday, October 10th.

"The underlying strength of our economy remains evident in the steady growth in income tax and VAT receipts. However, the sharp underperformance of corporation tax is more evidence that, as I have warned many times, these receipts cannot be relied upon," Mr McGrath said.

He added that €6 billion in windfall receipts have been transferred to the National Reserve, or 'Rainy Day' Fund as a measure to reduce the State's exposure to corporation tax receipts, as well as committing €2.25 billion of such takings to the funding of capital projects.

"In addition to this, work is at an advanced stage on proposals for a longer-term investment fund that will enable us to use some of these receipts to prepare for future fiscal pressures."

The Minister added: "Ultimately, however, the best way to guard against exposure to windfall receipts is by pursuing a budgetary policy that strikes the correct balance between addressing the challenges of today and ensuring our public finances remain sustainable over the medium-term.

"It is on that basis that Budget 2024 will be framed."