Ireland’s tax receipts continue to record strong growth; €25.3 billion spending underpins supports to public services and the economy

An Exchequer deficit of €1.1 billion was recorded in end-April 2022. This compares with a deficit of €7.6 billion in the same period last year. The €6.5 billion improvements in the Exchequer balance was driven by strong growth in tax revenue, with tax receipts of €21.1 billion to end-April, up €5 billion (over 30 percent) on an annual basis.

The annual increase is, however, distorted by the stringent level-5 restrictions that were in place in the opening months of last year. On a 12-month rolling basis, the Exchequer recorded a deficit of €0.8 billion.

At €9.5 billion to end-April, income tax receipts were up almost 20 percent on an annual basis, and reflect the strength of the labour market with employment, for instance, now at its highest level ever.

Reflecting the recovery in consumer spending, VAT receipts to end-April amounted to €6 billion, up almost 30 percent from the same period last year. However, the year-on-year comparison is impacted by a number of factors including the public health restrictions that were in place last year. In addition, the standard rate of VAT was lower in the opening months of last year. That said, VAT receipts were 21 percent higher than in the same period in 2019 (that is, pre-pandemic). At €1.7 billion to end-April, excise duty receipts were also up 3 percent on an annual basis.

Corporation tax receipts amounted to €2.3 billion to end-April, up by €1.7 billion relative to last year although this reflects, in part, a timing issue.

Total gross voted expenditure to end-April amounted to €25.3 billion, €1.4 billion or 5 percent below the same period in 2021. This is driven 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 support for people and businesses.

Health expenditure to the end of April amounted to €7 billion, up €0.6 billion on the same period in 2021. This reflects increased support to the sector and the measures implemented as part of the health and social care COVID-19 action response.

Commenting on the figures, the Minister for Finance, Paschal Donohoe, said, “Today’s figures show that the strong momentum in tax receipts has continued into the start of the second quarter. While the annual comparisons are distorted due to a number of factors, in particular the Level 5 restrictions that were in place last year, the underlying trends are a positive sign of the strength of the economic recovery.

“It is also important to stress that today’s figures are, of course, backward-looking. We expect economic activity and the public finances to be significantly affected by the war in Ukraine.”

The Minister for Public Expenditure and Reform, Michael McGrath, said,“Government continues to support the economy and public services with the expenditure of over €25 billion in the first four months of the year. This is marginally below profile by €111 million and €1.4 billion lower than the same period in 2021. This lower level of expenditure reflects the gradual unwinding of labour market and business support as Ireland emerged from the pandemic.

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