Strong VAT receipts of over €3bn boost government tax levies in January


More than 3 billion euros in VAT receipts, reflecting the traditionally busy Christmas trading period, boosted state tax receipts in January and cleaned up public finances at the start of the year.

The latest Treasury statements published by the Ministry of Finance show that the government collected 6.7 billion euros in taxes last month, up 24% (1.3 billion euros) compared to the same month last year.

Some €3.1 billion came from sales tax. “January is usually the most important VAT month of the year, incorporating the Christmas commercial period, and as a result, revenues of 3.1 billion euros were collected, up from more than 0.7 billion euros or 32% compared to January 2021,” the department said.

Reduction

However, he warned that revenue in 2021 had been hit by the temporary reduction in the standard VAT rate and the introduction of tough public health restrictions, effectively flattering the year-on-year comparison.

Compared to January 2020, a more stable base, revenue increased by €400 million or 15%.

The government’s other major tax channel, income tax, generated 2.6 billion euros, 13% more than the same month last year, reflecting the continued recovery of the labor market, while corporate tax brought 81 million euros to the Treasury. January is generally not a big month for business tax.

Over 12 rolling months, the Treasury recorded a deficit of 6.4 billion euros in January, driven mainly by Covid support expenditure.

Total expenditure for January amounted to 7.1 billion euros. Of this amount, gross voted expenditure was €6 billion, €300 million less than the same period in 2021.

This is due to lower expenditure on social protection due to the payment of pensions for a fifth Friday in January 2021 and also lower expenditure related to Pandemic Unemployment Benefit (PUP).

Finance Minister Paschal Donohoe said: “Today’s figures show that the strong momentum in tax revenue has continued at the start of this year.”

“While year-to-year comparisons flatter tax revenue performance, the underlying trends are a positive sign of the strength of the national economic recovery,” he said.

“Since the start of the pandemic, the government’s approach has been to support the economy through countercyclical fiscal policy to mitigate the effects of the Covid-19 outbreak,” he said.

“This has led to a significant increase in public debt which is now approaching a quarter of a trillion euros, or the equivalent of 47,500 euros per capita, one of the highest figures in the developed world,” Donohoe said.

The minister said the fiscal cost of the pandemic has been huge but worth bearing.

“The government’s approach has worked well and the government has laid the foundations for the strong domestic recovery seen to date,” he said.

“With private demand now accelerating rapidly and supply bottlenecks already evident in some sectors, it is essential to slow the rate of growth of public demand to avoid overheating the economy. ; countercyclical fiscal policy works both ways,” he said.

Public Spending and Reform Minister Michael McGrath said January’s spending figure of nearly €6 billion reflected the continued support of people, public services and the economy throughout the challenges of the pandemic.


Business Today

Get the latest business news and commentaryREGISTER HERE

Previous Children's mental health epidemic must be tackled now, says charity worker
Next Live News: Turkey's Inflation Hits 48.7% as Interest Rates Cut