Latest figures show 5.5% rise in tax revenue in first two months of year

There has been a rise in the State’s tax revenue amounting to 12 billion euro in the first two months of the year, an increase of 5.5% compared to the same time frame last year, figures from the Department of Finance have suggested.

The growth was largely driven by a growth in income tax, VAT and excise duties.

Figures published by the department showed that income tax receipts jumped by 5.7% compared to last year, with a rise to 5.3 billion euro.

The statistics indicated that corporation tax receipts were down slightly on last year at 500 million euro collected during the period.

But there had not yet been any significant payment months for this revenue stream, according to the department.

Total gross expenditure to the end of February amounted to 15 billion euro, which was 22% higher than the same period in 2023.

The overall gross expenditure was 20% more than last year at 2.3 billion euro, which the department said reflected the higher investment announced in Budget 2024, including an additional pay day in the first two months of 2024.

Gross capital expenditure was up by 381 million euro on last year, reflecting the ramping up of the National Development Plan.

An Exchequer deficit of 0.1 billion was recorded at the end of February, but this was due to a technical factor, as four billion euro was transferred to the National Reserve Fund last year, which reduced the Exchequer balance by the same amount.

When this was accounted for, the underlying position for the period was a deterioration of some 1.25 billion on last year, with increased public expenditure offsetting growth in tax revenues.

Minister for Finance Michael McGrath said: “Today’s figures largely represent the continuation of trends observed last month and towards the end of last year.

“The 7% increase in tax revenues in February compared to the same month last year is to be welcomed, and is further evidence in particular of the strength of the labour market.

“The 5.5% growth in tax revenues across the first two months of the year is broadly consistent with our forecast on Budget day.

“However, I would emphasise that it is too early at this stage in the year to draw any conclusions about the trajectory of tax receipts, particularly before the key corporation tax payment months.

“The coming months will provide a firmer indication of the pattern of tax receipts across the year.

“Overall, our economy has proven to be remarkably resilient against the backdrop of significant external uncertainty.

“In a more shock-prone world, it is essential that we maintain our public finances on a sustainable footing. This is the best way to ensure that we are in the strongest possible position to respond to external challenges.

“Work on drafting the legislation to provide for the Future Ireland Fund and the Infrastructure, Climate and Nature Fund is now at an advanced stage, and I look forward to bringing it to government shortly.”

The Minister for Public Expenditure Paschal Donohoe said: “Expenditure of 15 billion euro to end February demonstrates the continued substantial investment across a range of public services.

“Due to calendar timing, a portion of the 22% year-on-year increase can be attributed to an additional February payment date for certain schemes and payroll across public sector workforce.

“Overall, it reflects the Budget 2024 approach focused on delivering our economic, social and climate ambitions.

“It also reminds us, at this early point in the year, of the necessity of adhering to spending plans so that we can properly manage our finances and ensure that services are provided in as timely and efficient way as possible.”