January is an important month for tax receipts and the largest month for VAT receipts as it encompasses the Christmas trading period. Overall, tax receipts were €7.5 billion in January, up 12 per cent on an annual basis driven by strong growth in income tax and VAT, although the latter tax head was inflated by a technical factor which boosted receipts. When this technical factor is adjusted for, total tax receipts increased by 9 per cent compared to the same period last year.
VAT receipts in January were €3.7 billion, up 18½ per cent or €0.6 billion on the same period in 2022. However, the year-on-year comparison is inflated due to a technical factor whereby €0.2 billion of receipts withheld from December’s figures to fund potential repayments in January were returned to the Exchequer. Excluding these receipts, VAT was up 12 per cent or €0.4 billion on an underlying basis.
At €2.8 billion, income tax receipts remain robust, up over 9 per cent on an annual basis, reflecting the continued resilience in the labour market. January is not a significant month for corporation tax and accordingly receipts of €50 million were collected.
Total gross voted expenditure in January amounted to over €6.4 billion, €0.5 billion or 8 per cent above the same period in 2022. This demonstrates the increased investment agreed as part of Budget 2023.
Gross voted current expenditure in January amounted to €6.1 billion, €0.4 billion or 6.5 per cent ahead of the same period in 2022. This reflects growth in expenditure across a range of key sectors. Health sector expenditure increased by €366 million, reflecting additional resources allocated to the HSE. Current expenditure in the Department of Children, Equality, Disability, Integration and Youth was €125 million (6.3 per cent) ahead of the same period last year. This is related to the provision of supports for arrivals from Ukraine and International Protection applicants as well as enhanced investment in childcare.
Gross voted capital expenditure at end-January amounted to €358 million, which was €101 million (39.9 per cent) ahead year on year. This is driven significantly by increases in the Department of Education of almost €57 million, due to increased spending on the School Building Programme. Gross Voted Capital expenditure in the Department of Environment, Climate and Communications was €21.5 million (212 per cent) ahead of January 2022. This was due to the ramping up of the retrofit schemes and the continued rollout of the National Broadband Plan.
Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:
“Today’s figures show that the strong momentum in tax receipts has continued into the start of this year.
The strength in income tax, in particular, is a positive signal of the continued resilience in the labour market with close to a record-low unemployment rate of just 4.4 per cent recorded in January. Indeed, the latest incoming data, including today’s figures along with the pickup in core retail sales and consumer sentiment suggest that the downturn in the domestic economy may not be as severe as previously anticipated.
It is crucial that we continue to use the positive momentum in the public finances to reinforce our fiscal buffers so that, in this uncertain global environment, we retain our capacity to effectively respond to future challenges”.
The Minister for Public Expenditure, National Development Plan Delivery, & Reform, Paschal Donohoe T.D. said:
“Over €6 billion was spent on public services across Government in January. This year-on-year increase of 6.5 per cent in day-to-day expenditure reflects the Government’s Budget 2023 strategy. This year nearly €78 billion will be spent on public services across Government. This will provide for investment in the future of our public services. There will be more teachers and Gardaí, more hospital beds and healthcare staff, and increased rates of payment for social welfare recipients.
Capital Spending is up almost 40 per cent on the same period last year. This reflects investment in our schools and our childcare sector and the retrofit of homes across the country to make them more energy efficient. As delivery of the National Development Plan ramps up further in 2023 capital spending is expected to increase by over 10 per cent this year. This will provide significant investment in transport, healthcare, and housing sectors.”
ENDS
Fiscal Monitor January 2023