Business Irish

Saturday 22 September 2018

Merry Christmas for taxman with record monthly Vat haul

The State’s record Vat take in January signals buoyant consumer spending during the run-up to Christmas.
The State’s record Vat take in January signals buoyant consumer spending during the run-up to Christmas.
Colm Kelpie

Colm Kelpie

Vat receipts for January were the highest collected in the history of the State for a single month, signalling buoyant consumer spending in the run-up to Christmas.

The Exchequer started off 2018 on a strong footing, with the tax take €236m better than the same month in 2017, driven by strong performances in income tax and Vat.

Vat was up €137m or 5.7pc on the same month in 2017 to €2.45bn. The previous peak was in January 2008 at €2.34bn.

Income tax also fared well, up 6.6pc or €108m to €1.75bn.

Analysts hailed the strong performance in Vat. "Despite some concerns around Christmas spending, Vat receipts surged over the Christmas period, indicating strong consumer spending.," said Peter Vale, tax partner at Grant Thornton.

"Consumers appeared to set aside Brexit and other concerns, resulting in Vat receipts that were over 5.7pc higher than what was a strong January 2017 performance.

Francois Villeroy de Galhau, governor of the Bank of France. Photo: Bloomberg
Francois Villeroy de Galhau, governor of the Bank of France. Photo: Bloomberg

"It is particularly encouraging to see Vat get off to such a strong start, auguring well for the year ahead."

Overall, tax revenues of €5bn were collected in January, an increase of 4.9pc, or €236m, on January 2017.

The Department of Finance said January is traditionally a quiet month for corporation tax and receipts of €25m were recorded. But this equated to a €39m decrease when compared to January 2017.

In other tax heads, €124m was collected in stamp duty receipts in January, up 47.3pc, or €40m, year-on-year. Capital Gains Tax receipts amounted to €62m, an increase of €38m on January 2017. Customs receipts of €17m were collected, which represented a year-on-year decrease of €5m.

On the spending front, total net voted expenditure to the end of January at around €4bn was up €140m or 3.7pc in year-on-year terms.

Davy Stockbrokers economist David McNamara said the latest exchequer returns show that the public finances began the year on a solid footing.

Chambers Ireland CEO Ian Talbot said the record Vat returns "signify growing consumer confidence and strong domestic demand, which is good news for business".

Meanwhile, at a Central Bank of Ireland symposium on financial globalisation, French Central Bank Governor François Villeroy de Galhau named- checked Ireland when talking about a "race to the bottom" on corporation tax.

"The race to the bottom on corporate tax rates also raises increasing challenges about social fairness and globalisation, and its sustainability, as President Macron stressed in Davos," he said. "It is even pointed out sometimes in debate about Ireland."

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business