Fall in corporation tax take not a reason to revisit budget, McGrath insists

Minister for Finance Michael McGrath (PA)
Minister for Finance Michael McGrath (PA) Minister for Finance Michael McGrath (PA)

A continuing decline in corporation tax receipts is not cause to revisit the budget, the finance minister has said.

Michael McGrath said figures showing the exchequer tax take from business profits was down for a third month in a row was not causing him “undue concern”.

Corporation tax receipts in October totalled one billion euro, which was down 45% on the same month last year.

The income in September and August was also down on 2022 levels.

Fianna Fail Ard Fheis 2023
Fianna Fail Ard Fheis 2023 Finance minister Michael McGrath speaks to media at the Fianna Fail annual conference at the Dublin Royal Convention Centre in Dublin (David Young/PA)

In the year to date, tax receipts of 15.7 billion euro are now behind the same period last year by 0.4 billion euro (2.7%).

Mr McGrath was asked about the figures as he attended the Fianna Fail ard fheis in Dublin on Saturday.

“We always said that this could happen and that there was a risk of receipts proving to be volatile in nature,” he told reporters at the Dublin Royal Convention Centre.

“I do think it’s important to put it in context. We would have collected some 22.6 billion euro in corporation tax last year. But a decade ago that was around four billion euro, and year to date, we are 430 million euro behind where we were at the same time last year. That’s 2.7%.

“That said, three months in a row does represent a trend. We do believe it is related to global economic conditions, specifically the export performance of certain sectors, pharmaceuticals and certain ICT hardware as well.

“And I take comfort from the VAT and the income tax figures which are a better measure of the domestic economy here in Ireland, and they continue to show pretty strong growth.

“So, it’s not a great surprise that we are seeing some volatility, given global economic conditions.

“But we have prepared for this day by running budget surpluses, by paying down the national debt, managing the finances carefully and putting funding away for the future. So this is a risk that we have always highlighted that would materialise some day.”

He added: “We won’t be revisiting the budget. The budget is predicated on government policy, which is of running significant surpluses, not spending the windfall corporation tax receipts, continuing to pay down the national debt relative to the size of our economy and making provision for the future. So the budget remains fully intact. And the focus now is on the implementation of the budget.”

Mr McGrath continued: “We always highlighted that this was a material risk.

“We’re seeing some signs of that materialising at this point, but not in a way that causes me any undue concern.”