Written answers

Thursday, 28 April 2022

Photo of Neale RichmondNeale Richmond (Dublin Rathdown, Fine Gael)
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10. To ask the Minister for Finance if he will report on the tax receipts for the first quarter of 2022; and if he will make a statement on the matter. [21166/22]

Photo of Michael MoynihanMichael Moynihan (Cork North West, Fianna Fail)
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64. To ask the Minister for Finance the way the overall tax receipts in the first quarter of 2022 compare with the same period in 2021; and if he will make a statement on the matter. [20521/22]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 10 and 64 together.

Tax receipts in the first quarter of the year amounted to €17.2 billion. This was driven by particularly strong growth in income tax, VAT and corporation tax. Total tax revenue was up by over €4 billion, or more than 30 per cent, on the same period last year.

Income tax receipts in the quarter were up by €900 million, or 16 per cent, on the first quarter of 2021. This is a reflection of the strong recovery in the labour market, with employment now at its highest level ever. The strong rebound in VAT receipts – up by €1.4 billion, or more than 30 per cent – points to the recovery in consumer spending.

Of course, it is important to remember that these annual comparisons are flattered by a number of factors, such as the impact of stringent public health restrictions in the first quarter of last year, as well as the temporary reduction in the standard rate of VAT (which straddled part of the first quarter of last year). These exaggerate the year-on-year growth.

Nonetheless, even when compared to 2019 – the ‘pre-pandemic’ position – VAT receipts are still up significantly, by 17 per cent.

Excise receipts of €1.2 billion were broadly flat on last year. This is due, in part, to the measures Government has taken to address the rising cost of living by reducing excise on petrol, diesel and marked gas oil, and likely also reflects the impact of rising energy prices.

Corporation tax receipts were €1.9 billion in the quarter, up by €1.3 billion on the same period last year. This is due in part to a timing issue, whereby receipts that would have been expected in August of this year have been received earlier, distorting the annual comparison. It also reflects increased profitability in a small number of taxpayers in the ICT sector.

I would caution that these figures are backward-looking: my Department expects that economic activity will be negatively affected by the Russian invasion of Ukraine in the coming months, with implications for the public finances by way of slower tax revenue growth and higher expenditure associated with re-settling Ukrainian refugees.

Finally, it is worth pointing out that sovereign borrowing costs are now rising and so the capacity of the Government to run large deficits is more constrained than during the pandemic.

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