The amount of tax collected by the State increased by almost 5% in January when compared to the same time last year, driven by strong VAT and income tax receipts.
The latest figures from the Department of Finance show that overall tax revenue for the month stood at €7.8 billion.
January is a VAT-due month, and generally the strongest VAT month of the year – taking in the Christmas trading period.
As a result, receipts of €3.8 billion were collected, up 4% on the same time last year.
However, the Department said year-on-year comparison is skewed by a technical factor whereby receipts were withheld from December’s figures in both 2022 and 2023 to fund potential repayments and then returned to the Exchequer in the following month.
Once this distortion is adjusted for, it said VAT in January was up by over 7%.
The higher VAT receipts were due to strong spending over the holiday period.
“With interest rates likely to have peaked, there will be optimism that this level of spending and resultant VAT receipts can be maintained throughout the year,” said Peter Vale, Tax Partner at Grant Thornton Ireland.
Income tax receipts also helped to boost tax take during the month, with €2.9 billion collected, up 2.9% on the same time last year. Meanwhile, excise duty receipts amounted to €500 million, up over 15%.
On the other hand, January is not a significant month for corporation tax.
However, the figures show receipts of €57 million were collected, up €7 million on the same time last year.
Overall, the Exchequer recorded a surplus of €2.3 billion in January, down from a surplus of €2.8 billion the same time last year.
Today’s figures show a significant increase in capital expenditure in January when compared to the same time last year.
Total gross voted expenditure came to €7.5 billion, €1.1 billion or 16.6% ahead of the same time last year.
“This reflects the continued ramp up of the National Development Plan including increased investment in retrofit and the National Broadband Plan rollout, our schools and our ambitious housing programme,” Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe explained.
“Spending on public services and supports has also increased reflecting the range of measures announced in Budget 2024 including the €12 increase in social welfare weekly payments,” he added.
Increased spending on cost of living supports is also reflected in the figures, Minister Donohoe said, citing the payment of the January bonus to 1.3 million social protection recipients.
Minister for Finance, Michael McGrath described the latest Exchequer returns as a “solid start” to the year, but added that we must remain vigilant to the risks to the public finances.
“The headline tax revenue figures for 2024 will, as has been the case in recent years, be heavily reliant on volatile corporation tax revenues, which showed considerable volatility last year,” he said in a statement.
“The first significant month for corporation tax revenue is expected to be March. I and my officials will be closely monitoring trends in tax receipts as they develop over the coming months,” he added.
Minister McGrath said his priority for the months ahead is to establish the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.
“These funds will be essential to protecting the sustainability of the Exchequer over the years ahead and work is continuing on the legislation that will underpin them,” he said.