Government has €5 billion surplus after bumper corporation tax and record €83.1 billion tax haul

Tax revenue growth left the Government with a €5 billion surplus last year, the latest exchequer figures show.

The State collected a record €83.1 billion in taxes in 2022, an annual increase of €14.7 billion.

Figures published by the Department of Finance show that income tax receipts last year amounted to €30.7 billion up 15% on 2021, and consistent with the strong post-pandemic recovery in employment

Corporation tax receipts amounted to €22.6 billion last year, nearly 50% higher than a year earlier. The Department said that for the first time ever, corporation tax receipts were the State’s second-largest income stream last year.

However, the department acknowledged that a significant part of the revenue stream is expected to be one-off in nature.

Minister for Finance, Michael McGrath said: “The end-2022 Exchequer figures show a large headline surplus was recorded last year.

“This reflects a number of factors, including robust income tax and VAT receipts, both of which reflect the strength of the post-pandemic recovery in demand and employment.

“The phasing out of Covid-related expenditure is another reason for the surplus last year.

“By far the most important factor behind the headline surplus is the strength of corporation tax revenue – receipts from this source have doubled since just before the pandemic.

“My Department estimates that around half of these receipts are potentially at risk – if these receipts were excluded, we would instead be facing a significant deficit.

“That is why Government has acted to mitigate this vulnerability by transferring part of this windfall to the National Reserve Fund to rebuild our fiscal resources.

“It is also important to stress that today’s figures are, of course, backward looking.

“They do not offer a guide as to the challenges that we will have to address going forward.

“Keeping the public finances on a sustainable trajectory puts us in the best position to meet these future challenges. That is what this Government will continue to do.”

Vat receipts were €18.6 billion last year, up €3.2 billion on 2021.

Excluding the Department of Finance’s assessment of transitory corporate tax receipts, the underlying general government balance is estimated to have been in deficit to the tune of around €5 billion last year.

The Minister for Public Expenditure Paschal Donohoe said: “Today’s figures demonstrate the significant support provided by Government throughout 2022.

“While the challenges of the pandemic began to recede other challenges have emerged.

“These challenges required a flexible approach to budgetary policy throughout 2022, with additional funding allocated where required.

“Additional supports have been introduced for people, households and businesses to assist them with the impact of increasing prices. Humanitarian supports have been put in place to welcome and provide for those arriving from Ukraine.

“This response was made possible by the strong position of our public finances.

“Looking forward the 2023, revised estimates have provided gross expenditure of over 91 billion euro.

“This will allow us to fund our public services to meet the challenges arising from Covid and the war in Ukraine, while also providing key investment to enhance public services, our education and healthcare systems, and our infrastructure including housing and transport networks.”