A large Budget spending package on Tuesday was followed by a generally positive set of tax numbers on Thursday, in the latest Exchequer returns.
Income tax receipts remain robust, buoyed by strong numbers in employment, up 7.1% year to date after a positive September.
Significant Budget day income tax cuts won’t kick in until January 2025 but the strength of the domestic economy should mean that there is no reduction in income tax receipts this year.
Consumer confidence remains high, with VAT receipts ahead 7% year to date after more modest growth in September. The large spending package announced on Budget day will further fuel consumer activity and should see VAT receipts remain strong into next year.
Corporation tax receipts have been the star of the show so far this year although September’s figures showed a small drop on the same month last year. However this shouldn’t distract from an exceptional year to date, up over 23% on 2023.
The small drop in September is not in our view indicative of any downward trajectory in corporation tax receipts, which should mean that critical infrastructure spending can continue to be funded into the future. Gaps in key infrastructure areas is arguably the biggest threat to the ongoing strength of foreign investment and resultant corporation tax receipts.
Overall, September rounded off another good quarter for the Exchequer, with no apparent warning signs, but with the usual caveat that as a small open economy we remain greatly exposed to matters outside our control.
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