Tax revenues solid in April, increased expenditure signals Govt’s continued investment in public service

Tax revenues solid in April, increased expenditure signals Govt's continued investment in public services - Ministers McGrath & Donohoe

• Today's Exchequer figures show that tax revenues to end-April were ahead of last year by €0.6 billion or 2.6 per cent.
• Income tax receipts in the period of €11.2 billion are ahead of 2023 by €0.7 billion or 7.1 per cent;
• VAT receipts of €7.4 billion are €0.4 billion or 6.3 per cent up on last year;
• Corporation tax receipts of €2.7 billion are behind 2023 by €0.8 billion, reflecting a weak Q1 performance that is likely to reflect timing issues;
• Total gross voted expenditure in the period amounted to €30.1 billion, €3.2 billion or 12.1 per cent above the same period in 2023 and €0.4 billion or 1.5 per cent above profile;
• An Exchequer deficit of €1.2 billion was recorded to end-April. While this is an improvement of €2.5 billion on last year, the annual comparison is distorted by the transfer to the National Reserve Fund in Q1 2023.

Tax receipts of €24.8 billion were collected in the first four months of the year, €0.6 billion or 2.6 per cent ahead of the same period last year, with steady growth in income tax, VAT and excise duties offsetting a decrease in corporation tax.

Income tax receipts in April of €3.2 billion were ahead of last year by €0.2 billion or 5.9 per cent, reflecting the continued resilience in the labour market. Cumulative income tax receipts of €11.2 billion stand €0.7 billion or 7.1 per cent ahead of 2023.

April is not a VAT-due month, with modest receipts of €0.3 billion collected. Cumulatively, VAT receipts of €7.4 billion are €0.4 billion, or 6.3 per cent, ahead of the same period last year.

April is also not generally a significant month for corporation tax receipts, with €0.3 billion collected. Cumulative corporation tax receipts of €2.7 billion are down on the same period last year by €0.8 billion. This reflects a large decline in March that is expected to be offset with a corresponding increase at a later point in the year.

Total gross voted expenditure in the quarter amounted to €30.1 billion, €3.2 billion or 12.1 per cent above the same period in 2023 and €0.4 billion or 1.5 per cent above/below profile.

An Exchequer deficit of €1.2 billion was recorded to end-April, representing a €2.5 billion improvement on the fiscal position at this point last year. However, as noted above, the year-on-year comparison is skewed due to the transfer of €4 billion to the National Reserve Fund in the first quarter of 2023.

Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:

"April is one of the less significant months for tax revenues, but insofar as conclusions can be drawn from today's figures, the most notable feature of the April performance is the strength in income tax receipts, continuing the trend that has been apparent so far this year. The 6.4% increase in overall tax receipts in April compared to the same month last year is a solid performance, and is in line with budget expectations. The performance of income tax and Vat year to date is encouraging, and points to a domestic economy that is holding up well despite a number of headwinds.

The May returns, when further VAT and corporation tax receipts are expected, will provide a clearer indicator of the tax revenue performance. However, overall, tax revenues are ahead of the same period last year even despite the decrease in corporation tax seen last month.

This is firm evidence of the fundamental strength of our economy and our labour market, and speaks to the success of Government's careful and balanced approach to budgetary policy. As outlined in the Stability Programme Update published recently, my expectation is that the economy will experience modest growth in 2024 but importantly living standards will improve for the overwhelming majority of households as incomes rise in real terms. With inflation now moderating quite quickly, interest rates expected to fall over the period ahead, and further reductions in energy prices at the retail level anticipated, the pressures many consumers have faced will likely ease across the year and this will provide a further boost to the domestic economy.

I am pleased that we are making progress in relation to the Future Ireland Fund and Infrastructure, Climate and Nature Fund Bill 2024. This is currently at Committee Stage in the Dáil and the legislation is a central part of the Government's strategy for the long term management of the public finances."

The Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D. said:

"Expenditure of €30 billion to end April illustrates the Government's continued investment in strengthening our public services. Enhanced supports are being provided most notably through improvements in our Housing, Education and Childcare sectors, as well as through our Social Protection system for those who need it. In addition, the Increased Cost of Business scheme is now up and running and will provide a helpful contribution towards the rising costs faced by businesses.

However, current expenditure risks are emerging. Careful management of expenditure by all Departments is required to ensure we can continue to provide public services in a sustainable way for both our economy and society and to ensure that our hands are not tied in terms of the decisions we can make in the public interest in Budget 2025."

ENDS