Politics

State’s tax receipts surge to record €63bn as economy rebounds

Government tax receipts have surged to record levels as spending, employment and corporate profits rebound with the lifting of pandemic restrictions.

The latest exchequer returns for November show the Government has collected €62.3 billion in tax so far this year, €5.3 billion more than expected.

The 11-month total exceeded the €57 billion in tax receipts generated for the full year last year and represents that largest annual tax haul to date.

The returns were buoyed by a sharp rebound in income tax and VAT receipts linked to the reopening of the economy and another surge in corporation tax.

November is generally the largest month of the year for receipts and the most important month for income and corporation taxes.

The business tax generated €4 billion in November alone, according to the latest figures.

Cumulatively corporation tax receipts are now running at €13.5 billion for the year, €2.8 billion or 25.8 per cent above official expectations.

The figures come as the State signs up to the OECD-brokered deal on tax, which will effectively end the prized 12.5 per cent rate.

The figures show VAT netted the exchequer €15.2 billion (€1 billion ahead of target), most of it since the lifting of restrictions in May.

The sales tax is one of the strongest indicators of the pick-up in consumer activity.

Income tax, meanwhile, generated €24.4 billion (€1 billion above profile), a reflection of the stronger-than-expected recovery in employment. Figures on Wednesday showed the State’s jobless rate fell to a pandemic low of 6.9 per cent last month.

Another positive indicator

Minister for Finance, Paschal Donohoe said: “Tax receipts to end-November offer another positive indicator as to the strength of our economic recovery over recent months.”

“VAT receipts, in particular, reflect the significant rebound in consumer spending, while the income tax performance reflects the ongoing recovery in the labour market; indeed, figures published last week show that the level of employment is now back at pre-pandemic levels, though this varies across sectors,” he said.

“Corporation tax receipts in November were very strong, reflective of a very robust performance of many higher-technology sectors during the pandemic,” he added.

On a 12-month rolling basis, the exchequer recorded a deficit of €4.8 billion in November.

On the spending side, total expenditure to the end of November amounted to €74.7 billion. This was almost €2.6 billion or 3.4 per cent below profile as a result of an “underspend” across several departments.

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