THE LATEST EXCHEQUER returns show that tax revenues for the first nine months of the year came in at just under €58 billion.

Tax revenues to end-September were €57.9 billion, up €12 billion (26%) on the same period last year, according to the Department of Finance. 

The increase is partly flattered by the level-5 Covid lockdown that was in place in the opening months of last year as well as a number of other technical factors.

Income tax receipts were up 16% on an annual basis to €21.4 billion for the first nine months, reflecting continued momentum in the labour market. 

Corporation tax receipts amounted to €13.8 billion to end-September, representing an annual increase of almost €5.8 billion.

Reflecting a recovery in consumer spending, VAT receipts were €15.3 billion, up nearly 23% on an annual basis.

Total gross expenditure amounted to €59.2 billion, down 2% or €1.4 billion on the same period last year. This was largely driven by the unwinding of Covid-19 supports, according to the department. 

An Exchequer surplus of €7.9 billion was recorded to end-September. On a 12-month rolling basis, it amounted to €6.8 billion.

Minister for Finance Paschal Donohoe said the figures show that tax receipts remained robust in the third quarter of the year.

“The strength in income tax, in particular, is a positive signal of the continued momentum in the labour market. However, the strength of potentially volatile corporation tax receipts provides an artificially positive picture of the public finances,” Donohoe said.

“To be clear, these receipts are, of course, very much welcome, and reflect well on Ireland as an attractive location for highly profitable multinational firms. But, as I have warned many times, these receipts are highly concentrated among a small number of companies and, as such, are subject to extreme potential volatility and cannot be guaranteed at current levels into the future.

He said the department estimates that excess corporation tax receipts – that is the amount that cannot be explained by underlying drivers and, therefore, may be more vulnerable to a shock – could amount to somewhere in the region €8-10 billion this year.

“If these ‘windfall’ receipts were excluded a significant deficit would be in prospect this year,” he said.

“In order to rebuild our fiscal buffers we will start replenishing the National Reserve Fund with some of these excess receipts. This year €2 billion will be directed into the Fund. Next year, €4 billion will be transferred.”

Peter Vale of Grant Thornton said it is “quite remarkable” that the numbers show that consumer spending remains strong despite “the uncertain economic environment and interest rate increases”. 

“Despite the incredibly positive figures today, it is likely that we will still see a levelling off in the VAT figures in the final quarter of the year, in particular once the impact of higher energy costs is felt by consumers,” Vale said.

“Once again there was an exceptionally strong set of corporation tax numbers, €1bn ahead of the same month last year. For the most part, the September figure reflects 2021 profits.”

He said it is possible that any further dip in the global economy in the final months of the year, particularly in the life sciences and technology sectors, will impact on corporation tax figures for the key month of November, where the returns reflect 2022 results.

“Overall, the September figures represent another excellent set of numbers. While there is clearly much uncertainty ahead, the resilience of the Irish economy to date is remarkable.”