Corporate tax receipts fell slightly in May according to the most recent treasury returns, underscoring the volatile nature of this source of revenue.
A total of €2.7 billion in taxes were collected from businesses during the month, down by €200 million or 6.2% on the same month last year as higher payments and lower profits impacted returns.
However, corporate tax receipts were still €1.1 billion or 20.7% faster than last year, reaching €6.3 billion.
Overall, the treasury took €33.1 billion in the first five months of the year, an increase of €3.1 billion or 10.2% over the same period in 2022.
€9 billion in taxes was received in May itself, up only 1% from the same month last year.
At the end of May, the treasury ran a €600 million deficit, compared with a €1.4 billion surplus at the same point last year.
The Treasury said the difference was boosted by a €4 billion transfer to the National Reserve Fund (NRF) in February.
But when the figures are looked at on a rolling 12-month basis, the treasury had a €3 billion surplus at the end of last month.
However, this total fell to a base deficit of €4 billion on a rolling 12-month basis, when transfers to the NRF, proceeds from the disposal of bank equity and excess corporate tax revenues are taken into account.
Income tax revenue increased by 9.4% or €200 million in May 2022, and by the same percentage for the year as a whole.
May is the month due for VAT and receipts up to the end of the month were up nearly 12% over the same period last year, although growth has slowed.
Excise revenue rose 4.5% on the month, but was cumulatively flat compared to the first five months of 2022.
The trend of relative weakness in stamp duty continues, with receipts down by €30 million in May last year.
At the end of May, a total of €42.5 billion had been spent by the Government, with a gross turnout of €33.8 billion, 6.3% faster than the same period last year.
Treasury Secretary Michael McGrath said Treasury Secretary returns remained strong but the decline in corporate tax receipts highlighted underlying vulnerabilities.
“Today’s Treasury returns present a mixed picture of our public finances. Income tax receipts remain encouraging, reflecting an economy in which the unemployment rate is now at the lowest level on record, but growth in VAT receipts has slowed compared to previous months. While still high, tax receipts companies in the month fell on an annual basis.”
The minister said this was a fluctuating and potentially unreliable revenue stream. “This decline highlights that, while the headline numbers may appear positive, there are real underlying vulnerabilities in our public finances.”
He said the Government was taking action to address risks around corporate taxes, transferring €6 billion of windfall revenue to the National Reserve Fund to strengthen the fiscal buffer.
Minister of Public Expenditure, Paschal Donohoe said today’s figures showed an increase in public spending of €2 billion compared to the same period last year, totaling almost €34 billion in spending.
“This level of investment demonstrates the Government’s continued commitment to improving public services as our population grows. In particular, these figures reflect progress in upgrading our infrastructure as part of the National Development Plan.”
Peter Vale, Tax Partner at Grant Thornton Ireland, although May was a strong month overall for the Secretary of the Treasury, there were some signs of a slowdown in major tax heads.
“On a positive note, income tax receipts reached 9.4% faster than the same period in 2022. Concerns about the delayed impact of job losses in the technology sector appear to have lessened, as the strong labor market continues to drive tax figures forward.
“While this year’s VAT figures were running 11.7% faster than last year, May saw receipts of a much smaller 2.7% ahead of May 2022. This would indicate some slowdown in consumer spending and likely also reflect the downside of higher interest rates. rates on discretionary spending power. The department also noted that timing may have played a role in the weaker numbers.
Mr Vale said it was a similar situation with corporate tax receipts, over 20% next year to date but relatively weak receipts in May. “This again points to the volatility in corporate tax receipts and will put more focus on the critical June. A positive June return would suggest the full year corporate tax numbers will be strong. Any weakness in June though might dampen
