While February is generally a relatively quiet month on the tax receipts front, figures for the month were 15% ahead of February 2021, continuing the positive trend witnessed throughout 2021.
Income tax was particularly strong, with receipts for the month 21% ahead of February 2021. With a tight labour market and wage inflation, it’s hard to see income tax receipts not maintaining this momentum.
February is a “non month” for VAT receipts but with consumer spending now running well ahead of pre-COVID levels it’s equally hard to see VAT returns not staying ahead for the rest of the year.
Boosting both of the above tax heads will be the receipt of any taxes warehoused during COVID, with those taxes likely to hit the coffers in the short to medium term, on the assumption that there is no blanket forgiveness of outstanding debts.
While February is also a quiet month on the corporation tax front, there’s no reason to believe that we’ll see any dip in receipts this year. Indeed, the corporation tax figures last year continued to trend upwards, driven by strong profitability in the pharma and technology sectors, in particular. While further global tax reform looms closer, there’s reason to believe that our corporate tax receipts can remain at current levels.
Whether the positive tax receipts result in tax reductions later in the year remains to be seen. In summary, another good month for Exchequer and nothing at the moment to suggest any deviation from this trend.