We are getting used to seeing tax receipts exceed target and these figures were no exception, with strong employment numbers translating into better than expected income tax receipts.
No news is good news and today’s exchequer figures continue the trend of robust tax receipts. Coming so soon after the positive Spring Statement by the Minister, the figures further increase the likelihood of significant tax cuts in October. Similar to last year, the main beneficiaries of the tax cuts will be the so called squeezed middle.
With April a quiet month for VAT receipts, the main focus today was on income taxes. We are getting used to seeing tax receipts exceed target although weaker than expected DIRT receipts did suppress April’s income tax figures. With employment numbers remaining strong and consumer confidence back at 2006 levels, it would be a surprise however if next month’s VAT figures are not equally impressive.
Of particular note is the significant increase in corporation tax receipts. It’s difficult to speculate what is behind the strong corporate tax receipts but strong multinational profits are most likely the explanation.
With the G20 meeting tomorrow in Turkey on tax matters, we can expect a renewed focus this week on international tax. Ireland is in a good position in this regard, with our reputation significantly enhanced following the abolition of the Double Irish structure last year. Since then, the spotlight has shifted to other jurisdictions, notably Luxembourg. In a competitive world, this is positive for Ireland.