Corporate taxes provide Donohoe with healthy surplus
Surging tax payments by companies propelled the Government's Exchequer balance to a healthy surplus in July, while spending came in a touch lower than expected, putting the Department of Finance on track to achieve a second successive budget surplus this year.
Tax payments by a handful of US multinationals here have delivered €14bn more than expected to State revenues over the past four years, helping to plug the budget gap and allowing Finance Minister Paschal Donohoe to deliver on his budget plans, despite repeated overspending on health. Corporation tax receipts hit €437m in July, bringing the total so far this year to €4.61bn - a figure that once again exceeded Government expectations by 4.8pc, and beat last year's outcome at the same stage by 10.3pc.
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The outperformance by company tax receipts comes amid concerns that the State is overly dependent on a small number of firms for a large part of its revenue, at a time when a move to new global tax rules will reduce Ireland's investment appeal.
Elsewhere on the revenue side, July was a Vat-due month, and receipts were €125m ahead of the monthly profile, bringing the year-to-date figure to €9.75bn. There was, however, a €142m shortfall on income which the department said was due to a timing issue that is expected to unwind.
On the spending, there was no detailed breakdown beyond the headline numbers, which showed net voted expenditure of €29.41bn, in line with official forecasts. Non-voted spending of €5.7bn was down by 2pc from last year.
The strong economic outlook, even if there is a no-deal Brexit, should bolster tax revenues throughout 2019.
The Central Bank of Ireland this week raised its growth forecast for this year to 4.9pc, thanks to stronger-than-expected exports.
Record numbers of people in work and expectations that wages will rise by 3.6pc this year will translate into higher income tax receipts, as well as more consumer spending, which should see strong Vat receipts.