AN EXCHEQUER SURPLUS of €2.8 billion was recorded in the year to the end of January.

January is an important month for tax receipts and the largest month for VAT receipts as it encompasses the Christmas trading period.

Overall, tax receipts were €7.5 billion in January, up 12% on an annual basis. 

However, the Department of Finance noted the latter tax head was inflated by a technical factor which boosted receipts. When this technical factor is adjusted for, total tax receipts increased by 9% compared to the same period last year.

The Department said the increase on last year was “driven by strong growth in income tax and VAT”. 

VAT receipts in January were €3.7 billion, up 18.5% or €0.6 billion on the same period in 2022.

However, the year-on-year comparison is inflated due to a technical factor whereby €0.2 billion of receipts withheld from December’s figures to fund potential repayments in January were returned to the Exchequer.

Excluding these receipts, VAT was up 12% or €0.4 billion on an underlying basis.

At €2.8 billion, income tax receipts remain robust, up over 9% on an annual basis.

The Department said this “reflects the continued resilience in the labour market”.

January is not a significant month for corporation tax and accordingly receipts of €50 million were collected, the Department said. 

“Today’s figures show that the strong momentum in tax receipts has continued into the start of this year,” Minister for Finance Michael McGrath. 

“The strength in income tax, in particular, is a positive signal of the continued resilience in the labour market with close to a record-low unemployment rate of just 4.4% recorded in January,” McGrath said.

“Indeed, the latest incoming data, including today’s figures along with the pickup in core retail sales and consumer sentiment suggest that the downturn in the domestic economy may not be as severe as previously anticipated,” he added. 

“It is crucial that we continue to use the positive momentum in the public finances to reinforce our fiscal buffers so that, in this uncertain global environment, we retain our capacity to effectively respond to future challenges.”