The latest Exchequer figures for the first six months of the year make for very positive reading, with tax receipts a staggering €7.4bn, or 25%, ahead of the same period in 2021.
Income tax receipts continue to impress, driven by strong employment numbers and wage inflation. Year-to-date figures are almost 17% of the same period in 2021.
While there is some anecdotal evidence of a slow down in hiring, income tax receipts should remain strong for the remainder of the year.
VAT receipts for the first six months are also strong, 26% ahead of the 2021 equivalent. While consumers are clearly concerned about cost of living increases, including interest rate hikes, so far it does not appear to have impacted on spending.
While inflation will partly act as a counterweight, there is a risk of a slowdown in spending in the second half of the year, potentially spelling an end to the higher VAT receipts seen earlier in the year.
The strong corporation tax figures for June are very welcome as to a large extent they reflect full year earnings estimates. Perhaps surprisingly, despite the threat of a significant global economic slowdown, there was no dip in corporate tax receipts in the month. This augurs well for corporate tax receipts in the crucial latter months of the year and is arguably the most important figure in today's release.
Overall, the strong Exchequer figures will provide comfort to the Government as it considers its Budget 2023 spending package, in particular the desire to mitigate cost of living increases. At this point it looks like there will be a significant tax surplus to fund the spending plans.