Surging corporation tax boosts State finances ahead of pre-election budget

Another large spike in corporation tax has boosted the Government’s financial position and paved the way for another giveaway budget in the autumn.

Half-year exchequer returns show the business tax generated €5.9 billion in June, up by €1.6 billion or 38 per cent on the same month last year.

Corporation tax receipts for the year now stand at €12.2 billion, up €1.6 billion (15 per cent) on the same period last year.

The latest figures are likely to pile political pressure on newly installed Minister for Finance Jack Chambers to unveil a big package of spending and tax measures in the budget, the last before the next general election.

Despite repeated warnings about the potential volatility of multinational profits, corporate tax receipts have grown almost continually since 2014. The business tax is now the second-largest source of income for the Government.

The June receipts generally reflect companies with financial years ending in December which include several big players in the tech sector here, including Google, Meta and Intel.

Government tax coffers were also buoyed by strong income tax receipts, which generated €2.8 billion in June and €16.7 billion for the year so far, €1.2 billion higher than the same period last year.

Robust income tax receipts are reflective of a strong Irish labour market with unemployment remaining near an historic low of 4 per cent.

VAT receipts, an indicator of consumer spending, were €11 billion for the six-month period, 6.2 per cent higher than last year.

Across all tax headings, the Government collected €44.7 billion in the first half of 2024, €3.8 billion or 9 per cent up on the same period last year.

The Department of Finance said an exchequer surplus of €3.1 billion was recorded in June compared to a surplus of €0.3 billion in the same period last year, an improvement of €2.8 billion.

However, it noted the annual comparison was distorted by the transfer of €4 billion to the National Reserve Fund last year. On a 12-month rolling basis, the exchequer recorded a surplus of €4 billion.

Gross voted current expenditure for the year to date was €42.3 billion, €3.6 billion or 9.2 per cent ahead of the same period last year and €1.4 billion or 3.5 per cent above profile.