From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
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Solid underlying tax performance in quarter 1; Need for Departments to remain within spending profile – Ministers McGrath & Donohoe
Tax receipts amounted to €20.1 billion in the first quarter of this year, up by €0.3 billion (1.8 per cent) on the same period last year. Increases in income tax, VAT and excise duties were offset by a decline in corporation tax.
At €7.9 billion, income tax receipts in the quarter remain robust, up by €0.6 billion (7.6 per cent) year-on-year; this is consistent with other evidence which suggests the labour market remains in good shape.
VAT receipts of €7.1 billion were €0.4 billion (5.4 per cent) higher than in the first quarter of last year, in line with estimates of consumer spending growth. Excise receipts of €1.4 billion were €0.2 billion (14.5 per cent) higher on an annual basis.
Corporation tax receipts of €2.4 billion in the first quarter were down by €0.8 billion (almost 25 per cent) relative to the same period a year ago; this reflects a sharp decline in March that likely reflects a timing issue.
Total gross voted expenditure in the quarter amounted to €22.8 billion, €2.9 billion or 14.9 per cent above the same period in 2023 and on profile. Specific sectors are reporting significant pressures with current expenditure ahead of profile by €275 million or 1.3 per cent, signaling the need, at this early point in the year for all Departments to manage spending and to stay within profile.
As a result, an Exchequer surplus of €0.3 billion was recorded in the first quarter of this year. This was a €2.3 billion improvement on the €2.1 billion deficit recorded in the first quarter of 2023, but the latter was affected by the transfer of €4 billion to the National Reserve Fund in the first quarter of last year.
Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:
“The first quarter figures are, in many respects, a continuation of the pattern evident in the second half of last year, with steady growth in income tax and VAT receipts but with significant volatility in corporation tax revenues.
The performance of the income tax and VAT tax heads provide evidence of a domestic economy that is performing well, notwithstanding continuing international headwinds. With record employment levels, the labour market remains in robust shape. As inflation continues to fall, the vast majority of households will experience a gain in income in real terms across this year, resulting in improved living standards overall.
While it is expected that the fall in corporation tax this month relates to timing issues and is likely to be made up later in the year, it serves to remind us of the inherent unpredictability in what is a highly concentrated revenue stream.
This volatility, and the concentration of these receipts, underpin the Government’s policy of establishing longer-term savings vehicles – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – that will help future-proof our public finances.”
The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D. said:
“Spending in the first quarter of 2024 demonstrates our significant investment in public services. This is enabling improvements in our social welfare system as well as the continued expansion of supports and services in our Housing, Education and Childcare Sectors.
Even with the substantial level of investment across Government, expenditure pressures are emerging in certain sectors, including our Education and Health sectors. At this early point in the year, the first quarter Returns acts as a real reminder of the need for all Departments to manage their spending and to remain within profile. It is vital that fiscal policy strikes the right balance between continuing to invest in critical services whilst also ensuring our plans are sustainable for the health of the public finances.”
ENDS