Exchequer returns August 2025 – Peter Vale commentary

The latest Exchequer figures for August contain mixed news for the Government, with a significant drop in corporation tax receipts the main feature.

Income tax receipts were strong, up 10.6% on August 2024, having previously looked like they had plateaued after many months of strong growth.  With the economy remaining at close to full employment, it would indicate that salary and wage inflation remain key drivers of the increase.  

While the VAT figures year to date show solid growth, there was evidence of a levelling off in the numbers in July. However with some more certainty on the tariff front, we may see consumer spending pick up again – the September figures will be key in this regard.

After exceptionally strong corporation tax receipts in July, there was a big fall in the August numbers compared to the previous year, down €1.6bn. The figures again underline our dependence on such a small number of companies for such a large portion of our receipts.  

While year to date corporation tax receipts are marginally ahead of 2024, the unpredictable nature of the monthly figures may make it challenging for the Government to plan ahead of Budget 2026. Unfortunately, corporation tax figures for the critical months of October and November will come too late for Budget deliberations.

While much less significant, capital taxes remain strong, underlying a level of confidence in the Irish economy.

Overall, today’s figures likely validate the Government’s caution around our reliance on strong corporation tax receipts to fund spending. While it would be wrong to read too much into one month’s figures, the October and November figures in particular take on added importance.