THE IRISH EXCHEQUER recorded a surplus of €200 million in the first three months of the year after tax receipts jumped over 30% compared to the same period last year.
The Government collected €17.2 billion in taxes between January and March, according to the latest exchequer returns.
That’s up €4.2 billion or over 30% on the same three month period in 2021 although the Department of Finance said the figures are “flattered” by pandemic-related factors, including a stringent lockdown in the first quarter of last year.
The exchequer surplus of €200 million at the end of March compared with a €4.2 billion deficit in the first three months of last year.
At €6.9 billion, income tax receipts remain the largest tax single tax head for the Government, up 16% on annual basis.
The department said the improvement reflects the “strength of the labour market”, with employment levels having recovered as the economy reopened fully in the first quarter of 2022.
VAT receipts were up 30% to almost €6 billion from the January to March 2021 period, when in-person consumer spending was at low levels. However, revenues from the sales tax were up 17% on the same period in 2019 before the pandemic.
Corporation tax revenues, meanwhile, were up by 224% from €1.3 billion last year to €1.9 billion at the end of March. This sharp increase is mostly due to what the department described as a “timing issue” with corporation tax returns usually expected in August being made in March.
But excise duty receipts were essentially flat compared to last year at €1.2 billion.
“This likely reflects the negative impact of rising energy prices on the volume of excise-related spending alongside policy decisions (the reduction in excise duty) which took effect last month,” the department said.
Commenting on the figures, the Minister for Finance, Paschal Donohoe, “While the annual comparisons are distorted due to a number of factors, the underlying trends are a positive sign of the strength of the domestic recovery.
“While the pandemic is receding, the fall-out from the Russian invasion of Ukraine will have a significant impact on the public finances. Higher prices for energy and other goods will weigh on economic growth in the months ahead, and this will affect tax revenue.
“The overall costs of providing for the reception of people arriving from Ukraine are likely to be very substantial. These costs will have to be borne – we have an obligation to our fellow Europeans to look after them as they flee for their lives. Higher levels of uncertainty will also be a headwind.”
It comes on the same day as the Central Bank downwardly revised its expectations for the Irish economy in 2022 due to the conflict in Ukraine.
The public finances are “well-positioned to address the most immediate needs arising from the conflict in Ukraine, including the necessary humanitarian response for those displaced by the war”, according to the Central Bank’s latest Quarterly Economic Bulletin.
However, the economists warned that the war is expected to “weigh” on external trade and overall growth while fuelling “strong” energy price inflation this year that could also drag down consumer spending.
“The outlook generally remains favourable, and I think that is important to emphasise,” said Mark Cassidy, Director of Economics and Statistics at the Central Bank.
“But clearly the economic effects of the invasion of Ukraine have added considerable uncertainty and they will undoubtedly weigh on growth and real incomes over the coming year.”
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