The key numbers coming out of today’s Exchequer figures are the VAT receipts.
Despite concerns that Christmas spending was less buoyant than expected, VAT receipts surged over the Christmas period, indicating strong consumer spending. Consumers appeared to set aside Brexit and other concerns, resulting in VAT receipts that were over 10% higher than the same period last year.
Overall, tax receipts in the month of January were 6.1% ahead of January 2016, with broadly all tax heads performing well.
Sustainability of tax receipts has received significant focus, particularly in the context of corporation tax. At this point, it is our view that the strong corporation tax receipts witnessed in 2016 will be replicated in 2017, with a shift in corporate profits away from offshore havens to onshore locations such as Ireland, partly driving that.
Strong employment figures would suggest that income tax receipts will also increase in 2017. The biggest perceived risk in terms of sustainability was arguably VAT, with consumer concerns around Brexit in particular expected to see spending and resultant VAT receipts come under pressure. Hence it is particularly encouraging to see VAT get off to such a strong start, auguring well for the year ahead.