Strong tax revenues create opportunities for the 2023 budget
The latest statements from the Exchequer have been released and show tax revenue is €3.8bn higher than expected for the year to date. Half of this overrun occurred in August alone, mainly due to corporation tax.
Since the beginning of the year, it is estimated that nearly 12 billion euros have been collected in corporate tax, up 69% compared to last year. This is due to the continued profitability of the ICT and pharmaceutical sectors in Ireland, which was very evident in the national accounts data also released on Friday. The other tax headings are also showing good results, with income tax and VAT having increased by 16% and 24% respectively since the beginning of the year.
Government spending fell 3%, with the reduction entirely due to the removal of COVID supports. Excluding social protection, expenditure is up by around 9%. Goodbody Stockbrokers noted today that a budget surplus is now very likely in 2022, but it is likely that the government will announce additional spending plans that will use some of this unexpected additional revenue to help businesses and households cope. to soaring energy prices.
According to Goodbody Stockbrokers, “While the concentration of corporate tax revenue is a concern, the additional revenue will be very helpful at this stage. Given the vulnerability of tax revenue and the likelihood of an international downturn in the coming months, the measures introduced should be targeted and temporary.”