Ireland has collected record levels of tax in recent years, driven by a fast-growing economy and booming corporate tax returns. The finance ministry still expects the tax take to rise by 6% this year, but that is down on the 7% forecast in April.
The downgrade follows a second successive monthly fall in corporate tax receipts in September that Finance Minister Michael McGrath said on Tuesday indicated a recent boom in the returns that Ireland is heavily reliant on was over.
Having more than doubled in the space of two years to make up 27% of the entire tax take, corporate tax receipts – mostly paid by a small number of multinational companies – were also forecast to rise by 7% this year.
Instead they are now expected to rise by 4% to 23.6 billion euros. The finance ministry also cut the forecast for 2024 to 24.5 billion euros from 25.1 billion euros.
As a result it lowered the 2023 projected budget surplus to 9.6 billion euros or 1.8% of gross domestic product (GDP), from the 10 billion euros forecast in July. Ireland is one of the few euro zone economies whose public finances are in surplus.
Ministers plan to include a number of temporary financial supports in next week’s budget to help households and businesses with cost-of-living pressures, some of which will kick in this year and further lower the projected surplus.
The government has not yet specified the cost of those measures, just that they will not be on the scale of the 4 billion euro package of one-off measures introduced a year ago.
Source: Economy - investing.com
