Ireland’s tax take has been broadly stable so far this year as bumper corporate tax returns and greater than expected resilience in income tax and VAT receipts staved off a forecast collapse because of the coronavirus pandemic, write Conor Humphries and Padraic Halpin.Ireland had expected its tax take for the year to be almost 10% or 2.1 billion euros lower year-on-year by the end of May when it published revised figures taking account of the shutdown.
Data on Wednesday showed it was just 8 million euros lower.
The finance department cited evidence showing job losses because of the lockdown were concentrated in sectors with lower average wages and higher proportions of part-time staff, many of whom are largely outside the income tax base.
But Finance Minister Paschal Donohoe said it was too early to extrapolate a trajectory for this year’s public finances from the May data alone.
“For now, that’s all it is. It’s a signal,†Donohoe told a news conference.
Wednesday’s data showed smaller than anticipated falls in income tax and VAT receipts and the €2.6 billion returned in corporate taxes in May compared to the €1.6bn forecast for what is typically the second largest month for corporate tax returns with 15% of the total year’s take due.
The state collected €1.6bn of income tax in May, down 7.8% year-on-year but above the €1bn forecast for the first month when returns reflected that 26% of the labour force was temporarily or permanently unemployed.
VAT receipts fell 35.4% year-on-year in May, but also exceeded the revised expectations by more than 50%.
With government spending 19% or 4.2 billion euros ahead of its original target, the state posted a 6.1 billion euro budget deficit at the end of May. A deficit between 7.4% and 10% of GDP is forecast for 2020.
