Overall, tax receipts for February were positive, with returns for the month 13% ahead of February 2022.
A key focus in February was on income tax, which finished the month 5% ahead of the 2022 comparable. This represents a slowdown on the growth seen to date, although the labour market remains tight with record numbers in employment.
March numbers will provide a better indication as to how income tax figures will trend for the full year.
While February is a quiet month for VAT, the figures for January were very strong. However looking ahead, the adverse impact of higher interest rates on consumer spending power may see VAT receipts come under pressure later in the year.
While the early months of the year are generally quiet on the corporation tax receipts front, figures for the first couple of months are strong. According to the Department, this reflects strong profitability in large corporates across a range of sectors.
While we remain very exposed to the global economic climate, increased profitability in large corporates should see 2023 corporate tax receipts exceed what was a stellar 2022, which would be a huge boost to the Exchequer. We may be entering the realm of “recurring windfall” receipts!
In summary, two solid months to start the year for the Exchequer and good signs for the year ahead, despite a slight weakening in income tax receipts.
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