April was another good month for the Exchequer, with no sign of any slowdown in tax receipts. Income tax receipts remain strong, currently running almost 10% ahead of the same period in 2022. So far, job losses in the technology sector are not having a negative impact on income tax returns. This is slightly surprising but indicative of the ongoing strength of the labour market.
While April is a quiet month on the VAT front, year to date figures are 13% ahead of the same period in 2022, likely indicating strong consumer spending rather than inflation. The fact that spending has held up so well in the face of higher interest rates is surprising but likely reflective of historically high consumer savings.
Corporation tax remains the star performer, with receipts now €1.3bn ahead of 2022, year to date. June figures will provide a good measure of expected full year corporation tax returns; a strong June would provide comfort that 2023 figures will surpass what was an exceptional 2022.
While global tax changes to date have been good for Ireland, there is no doubt that future changes could take a slice of our corporation tax receipts. However, at the moment it looks like that slice will be from a bigger cake, such that our overall receipts may hold up. We remain hugely susceptible to changes in the global economic climate, augmented by a reliance on a small number of very large MNCs based here. In summary, with tax receipts already €3bn ahead of 2022, the Exchequer remains in a very strong position.
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