We’ve all heard the stories about corporation tax, how the boom in tax receipts won’t last, and how the Government would be crazy to rely on windfall taxes to fund day-to-day spending.
For the moment, at least, the gravy train keeps rolling, as shown in the exchequer returns for June which were published a fortnight ago. Now we have some more detail on what’s happening thanks to the Government Finance Statistics for the first three months of this year published by the Central Statistics Office on Friday.
As is often the case with statistics such as these, the absolute numbers are important but it’s really the change that is relevant. Those changes were almost universally positive for Ireland between January and March.
At the end the quarter, total Government revenue stood at €30.9 billion, the CSO said. That was €2 billion ahead of the same time last year driven by an increase in taxes of €1.5 billion and social contributions of about €500 million.
Much of the tax increase came about because of a rise in, you guessed it, corporation tax.
As Grant Thornton’s Peter Vale pointed out, “a key component” of the €1.5 billion increase in taxes was corporation tax, which was “up 25 per cent over the prior year after excluding the Apple tax case-related payments. While corporation tax figures remain volatile, they continue to trend upwards,” he added.
It’s a movie we’ve seen several times at this stage, but Vale spotted a few other wrinkles in the data that are worth noting. Namely, the sharp jump in income from capital gains tax (CGT).
CGT receipts jumped 64 per cent year-on-year. That’s a big rise in anyone’s language. While it’s true that CGT can be lumpy – all it takes is one or two big transactions to skew the numbers – it does indicate that people are still doing deals.
US president Donald Trump made his “liberation day” tariffs announcement on April 2nd, so its impact is not included in the CSO data. Yet it didn’t exactly come out of the blue. He had telegraphed the move for weeks ahead of time.
Clearly not everyone has been put off by the “heightened geopolitical and economic uncertainty” that practically every company or politician seems to be citing these days. Whether that will last is another question entirely.
