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Exchequer returns September 2023 – Peter Vale commentary

After a relatively poor August, September saw another mixed bag of results for the Exchequer.

Of most concern will be corporate tax receipts, 12% down on September last year. This follows a weak set of figures in August and underlines the volatility of corporation tax receipts.

The September figures represent a mix of preliminary tax payments based on 2023/2024 estimates but also final payments for 2022, hence they are not necessarily a good indicator for the trajectory of future receipts. However, if this performance is repeated in the key month of November, the expected large Budget surplus for 2023 will be under threat.

Looking beyond 2023, our corporate tax receipts are hugely dependent on the profitability of large multinationals based here. While the tax landscape continues to evolve, a pick-up in global economic conditions could yet see a bounce in corporate tax receipts next year, with a further potential boost from 2026 when the effective tax rate for large groups rises to 15%.

September saw a modest (4.1%) increase in VAT receipts over 2022, reflecting the impact of higher interest rates and energy costs but also the ongoing resilience of the Irish consumer. While discretionary spending power for many has been adversely impacted in 2023, consumers have continued to spend.

On the income tax side, receipts continue to track at circa 8% ahead of 2022, which is a strong performance and likely reflective of greater numbers in employment rather than wage inflation. 

In summary, weaker corporate tax receipts will be a concern for the Department approaching finalisation of the Budget 2024 package.

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