Budget 2024: Government lowers forecasts for surplus and corporate tax

Reuters

The Government is set to collect 0.6 per cent less tax than expected this year following a recent fall in corporate receipts and deliver a lower than forecast surplus that Tuesday's budget will further eat into, Department of Finance data showed on Saturday.

Ireland has collected record levels of tax in recent years, driven by a fast-growing economy and booming corporate tax returns. The department still expects the tax take to rise by 6 per cent this year, but that is down on the 7 per cent forecast in April.

The downgrade follows a second successive monthly fall in corporate tax receipts in September that Minister for Finance Michael McGrath said on Tuesday indicated a recent boom in the returns that Ireland is heavily reliant on was over.

Having more than doubled in the space of two years to make up 27 per cent of the entire tax take, corporate tax receipts – mostly paid by a small number of multinational companies – were also forecast to rise by 7 per cent this year.

Instead they are now expected to rise by 4 per cent to €23.6 billion. The department also cut the forecast for 2024 to €24.5 billion from €25.1 billion.

As a result it lowered the 2023 projected budget surplus to €9.6 billion, or 1.8 per cent of gross domestic product (GDP), from the €10 billion forecast in July. Ireland is one of the few euro zone economies whose public finances are in surplus.

Ministers plan to include a number of temporary financial supports in next week's budget to help households and businesses with cost-of-living pressures, some of which will kick in this year and further lower the projected surplus.

The Government has not yet specified the cost of those measures, just that they will not be on the scale of the €4 billion package of one-off measures introduced a year ago.