Surplus grew in October but officials say tax boom won’t last into 2023

The latest figures from the Department of Finance confirm the dramatic improvement in the public finances following Covid, but officials say bumper corporate tax levels are not expected to be matched next year.

ew figures released on Thursday for the year to the end of October show an exchequer surplus of €7.3bn in the first 10 months of the year, a dramatic reversal from a deficit of €7.4bn in the same period in 2021.

Unprecedented corporation tax receipts are the key contributor to the change. A record €16.2bn of tax was paid on company profits in the first ten months of the year. That was €6.6bn ahead of the same period last year, which was already a record. 

However, it is not expected to last, the official Fiscal Monitor report prepared by Department of Finance officials, states.

The corporation tax windfall was due to increased profitability in a small number of firms in the multinational sector, but it is not expected that these receipts will be replicated in 2023, the report states.

Income tax remains the biggest single generator of revenue for the State however, with workers paying €23.9bn so far this year, an extra €3.2bn versus the same period in 2021.

The other big tax pot collected annually is Vat. October is a so called non-VAT-due month, with just €200m collected but so far this year cumulative VAT receipts stand at €15.5bn. That’s increase of €2.9bn, or almost a quarter over the same period in 2021 however last year’s total was curtailed at least to some extent by the economy still enduing ‘lockdowns’ especially early in the year which hit the consumer spending that ultimately drives Vat.

This year’s higher than budgeted levels of tax collected has already been tapped to fund a range of mostly one-off cost of living supports announced in the Budget in September, many of which including extra child benefit and electricity bill supports are landing in peoples’ accounts this week. 

As well as tax paid the overall improvement in the public finances reflects a decline in State spending due to the unwinding of Covid-19 supports.

Gross revenue to end-October stood at €83.4 billion, an increase of €8.4bn compared to end-October 2021.

Total expenditure to the end of October was €76.1bn.

The Department of Finance forecast a full year surplus of €4.45bn when ministers announced the give-away Budget in September – but that forecast already looks conservative.

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