Exchequer returns

Exchequer returns April 2019 – Peter Vale commentary

Peter Vale Peter Vale

April is typically a quiet month on the tax receipts front.

However the figures for the month were depressed by higher than expected repayments of both corporate tax and VAT.  

While April is a “non month” for VAT, the repayments have contributed to a shortfall against target VAT receipts, year to date, of almost €200m.

Income tax figures remain mixed. There was a dip in the expected returns in February, which still hasn’t been clawed back. Given the strength of the labour market, there is no obvious reason as to why income tax receipts would not be at least on track to hit target at this stage of the year.

The star performer on the Exchequer front in recent years has been corporate tax.  The Minister expects a fall in receipts in 2019 - next month’s figures will provide an important indication as to whether corporate tax can continue to provide a buffer against any dips elsewhere.  Robust corporate tax receipts will be key in the event of a dip in other taxes later in the year due to Brexit concerns.

A key issue for Ireland is the sustainability of our corporate tax receipts in the face of significant upheaval in the global tax climate.  To date, the changes have broadly worked in our favour, however there is no certainty that future developments will have the same impact.

On the positive side and presumably indicative of strong spending, excise duties were ahead of target by €112m in April alone, representing a significant increase.

Overall, after four months of the year, the Exchequer returns remain relatively healthy, almost 6% ahead of last year and broadly in line with forecasts.  As May is the second most significant month for tax receipts, next month’s returns will be closely monitored.