Peter Vale, tax partner at Grant Thornton, comments on the end-2015 Exchequer Statement which was published by Minister Noonan this afternoon:
Full year tax figures released today make for interesting reading. They show tax receipts remaining buoyant right through to the end of the year. Of particular note for the full year is how strong the corporate tax receipts are. Indications are that the 2015 figures should be repeated in 2016, which will result in corporate tax making up more of the overall tax take.
When we look back to the boom years, income tax was then a relatively small part of overall tax receipts. It now represents a much bigger chunk of the tax take, which is not good for economic growth.
Strong corporate tax and figures should mean that there is scope to reduce the income tax burden. The month of December itself showed strong income tax receipts, indicating perhaps that more could have been done in the October budget on the personal tax front. There was no change in October to the marginal income tax rates.
A combination of high income tax rates and a strong labour market means we are likely to see strong income tax receipts in 2016. With people spending again, VAT receipts should also continue to outperform. Similarly, capital tax receipts are moving upwards reflecting increased prices and more activity generally.
A note of caution is if we become over reliant on rising corporate tax receipts. Corporate tax receipts from multinationals vary depending on the global economic climate. We only have to look at stock markets in recent days to see how things can change quickly.
Overall, 2015 was an excellent year for the Exchequer. All the indications are that we will see an even better performance in 2016 as the domestic economy grows further and Ireland continues to remain attractive to international investment.