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Exchequer returns October 2023 – Peter Vale commentary

October continued the trend seen in recent months for the Exchequer, with a very mixed set of results on the tax receipts front, down over 16% on October last year.

Corporation tax continues to be of most concern. Corporation tax receipts for October were down by €1bn, or 45%, on the same month last year. These figures are stark.

A further concern is that we appear to be heading towards a weak November. As November is a critical month for corporation tax receipts, a weak November will have a significant impact on the expected full year 2023 Budget surplus.

While the global corporation tax landscape continues to evolve, fundamentally corporation tax receipts are lower due to weaker expected profits in some of the largest multinational groups based here.

While October is a non VAT month, receipts have begun to level off, reflecting the impact of higher interest rates and energy costs on discretionary spend. However VAT receipts continue to exceed prior year figures, demonstrating the ongoing resilience of the Irish consumer. 

On the income tax side, while the rate of increase in income tax receipts has slowed, year to date receipts remain close to 8% ahead of 2022. In the circumstances, this is a strong performance and likely reflective of greater numbers in employment rather than wage inflation. 

In summary, after several years of very positive Exchequer figures, we’ve now seen a number of months with weaker data. 2023 tax receipts are now only marginally ahead of 2022, meaning the scale of the expected Budget surpluses over the coming years may need to be scaled back.

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