Ireland’s corporation tax takings drop in October for first time in 2020

5 Nov 20

A rare drop in corporation tax receipts in Ireland shows they cannot be relied upon in the future, the Irish finance minister has said.

 

Revenue from corporate tax in October was almost €600m less than in the same month in 2019, when the country collected €10.5bn.

Although the government still expects to receive more of the tax overall in 2020 than it did last year, Paschal Donohoe said the latest figures showed “the unreliability and unsustainability of corporation tax receipts”.

“We cannot rely on this revenue stream into the future – a fact that will be reflected in the Department of Finance’s medium-term forecasts when published in the spring,” he added.

Corporation tax, which is up 11.4% year-to-date, has not been enough to stop overall tax revenue falling by 5.3% in the first 10 months of 2020.

VAT and excise receipts have been particularly badly hit by the pandemic but, conversely, income tax was marginally higher in October than it was in the same month last year.

The Revenue Commissioners, Ireland’s tax collection office, kept back €550m from October’s receipts to facilitate payments under the Covid Restrictions Support Scheme, a programme to support businesses and the self-employed during the pandemic.

The latest figures also show the government deficit for the year up to the end of October has reached €11.7bn, compared with €1.7bn in the same period last year.

“Spending on our health service is at record levels, so too is the amount of resources aimed at protecting incomes,” said minister for public expenditure and reform Michael McGrath.

“We will continue to use the resources of the state to protect citizens, business and communities through the crisis.”

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