The latest Exchequer Returns have been released and show tax revenues are €3.8bn ahead of expectations in the year to date. Half of this overshoot came in August alone, predominately due to corporation tax.
 
In the year to date, it is estimated that close to €12bn has been collected in corporation tax, up 69% compared to last year. This is due to ongoing profitability in the ICT and pharma sectors in Ireland that was very evident in the national accounts data also published on Friday. Other tax headings are also performing well, with income tax and VAT up 16% and 24% in the year to date, respectively. 

Government spending is down 3%, with the reduction all due to the rolling off of COVID supports. Excluding social welfare, spending is up approximately 9%. Goodbody Stockbrokers today noted that a budget surplus is now very likely in 2022, but it is likely that the government will announce additional spending plans that use some of these extra unexpected revenues to help businesses and households deal with the energy price spike.

According to Goodbody Stockbrokers, "While the concentration of corporation tax receipts is a concern, the extra revenue will come in very useful at this point. Given the vulnerability of tax revenues and the likelihood of an international slowdown in the coming months, the measures introduced should be targeted and temporary."

Source: www.businessworld.ie