A large windfall of corporation taxes from the tech sector has helped push overall Exchequer receipts more than €2bn ahead of target for the year so far.

Corporation tax of more than €1bn was collected in August – nearly €800m more than expected – as large IT firms paid far more than projected on the back of pandemic sales, the Department of Finance said. Corporation tax receipts for the year now stand at €7bn, or 14pc ahead of profile, although these taxes can be volatile. Tax overall was well ahead of profile last month with nearly all tax heads coming in higher than expectations. August Exchequer receipts topped €4.2bn, or 25.6pc above the €3.4bn the Department had pencilled in for the month. That left overall Exchequer receipts in the year to date at €39.4bn as against a projected outturn of €37.4bn, or 5.4pc ahead of target.

Gross voted expenditure for the year is so far below profile, too, at €53.4bn, or nearly €1.7bn less than projections for this point in the year. This has left the 12 month rolling deficit at slightly more than €9.5bn, largely due to spending on Covid-19 emergency measures. The positive results for the month and the year to date will be welcome news for Finance Minister Paschal Donohue, who will be delivering Budget 2022 next month.

The Government has had to borrow heavily in the last 18 months to fund extraordinary amounts of pandemic support for businesses and households. The free spending, as well as increases to ongoing commitments in health and other areas, has alarmed both the Central Bank and the Irish Fiscal Advisory Council.

Both have warned that Government medium-term budget planning is unrealistic and that Mr Donohoe should increase taxes to put the public finances on a more stable footing rather than relying on growth alone.

Irish Independent, 02 September 2021