Public finances show deficit of €2.5bn at end of February
The public finances were €2.5 billion in deficit at the end of February. However, this was due to the transfer of €4 billion to the National Reserve Fund.
On a twelve-month rolling basis, the Exchequer had a €1.5 billion surplus.
Tax receipts overall were up €0.5 billion or 13% last month compared to February 2022.
When January and February are taken together, taxes are up €1.3 billion or 12.5% ahead to €11.4 billion compared to the same two-month period last year.
VAT returns were higher due to the timing of refunds accounted for last month. When that is taken into account, overall tax revenues are estimated to have risen cumulatively by 10.5%.
VAT returns for the first two months of this year were up €700 million or 21% to just over €4 billion but when adjusted for this technical factor, the increase was 15%.
€2.2 billion in income tax was collected in February, up just over 5% compared to the same month last year, which is a slowdown on the recent rate of increases in income tax. Income tax is up 7.5% to €5.1 billion in the year to date.
Corporation tax has more than doubled in the first two months of this year compared to the same period last year with €646 million collected compared to €301 million in 2022.
However, February is not a big month for corporate tax returns with most companies reporting their taxes from profits in June and November.
Expenditure in the first two months of this year was €17.3 billion. Voted expenditure was €12.3billion, 6.5% ahead of the same period last year.
“Today’s figures show that tax receipts continued to record robust growth in the opening months of this year,” said Minister for Finance, Michael McGrath in a statement.
“In particular, the solid growth in income tax and VAT receipts are a positive signal of the resilience of the domestic economy, and underline the strong employment performance with almost 2.6 million now at work,” he added.
Commenting on today’s figures, Tom Woods, Head of Tax at KPMG said the extra €1.3 billion in tax collected to date in 2023 represents a positive start to the year.
But he said there us a lot to play out in the year ahead.
“While inflation and a tight labour market are contributing to the extra tax collected, we can’t lose sight of the economic value of consistent, strong tax receipts,” he added.
Peter Vale, Tax Partner at Grant Thornton Ireland said the March numbers will provide a better indication as to how income tax figures will trend for the full year.
“While February is a quiet month for VAT, the figures for January were very strong. However looking ahead, the adverse impact of higher interest rates on consumer spending power may see VAT receipts come under pressure later in the year,” he said.