Irish Tax Take Declines

September 3, 2010 Taxation in Ireland

Irish TricolourTax revenues in Ireland fell 9 percent during the first eight months of the year, though the national Minister of Finance maintains that the economic recovery is still at an acceptable level with several key taxes performing better than expected.

On September 3rd the latest tax revenues figures from Irish Tax and Customs were released, showing that tax receipts for the first eight months of the year reached EUR 18.9 billion, EUR 1.9 billion lower than the same period in 2009, but only 0.7 percent lower the Government’s preset target. Brian Lenihan, Minister for Finance, commented approvingly on the results, saying that Ireland’s financial performance was on target with expectations. He added that in recent weeks local media has been underplaying the economy’s performance, calling it inadequate, but the latest results show that despite the seeming setback the country is not in “financial jeopardy”.

Corporate tax collections were shown to have the largest year-on-year drop during the initial eight months of 2010, falling by 24.1 percent to EUR 1.84 billion, although they were 4.3 percent above the Government’s expectations. Personal income tax was reported to have reached EUR 6.64 billion during the eight months, a fall of 8.2 percent from the same period in 2009, and 3.9 percent below projections. Value Added Tax (VAT) receipts were the largest contributor to the tax take, at EUR 6.74 billion. Despite dropping by 6.4 percent, when compared to the first eight months of 2009, VAT collections were 0.7 percent above previous estimates. Collections of stamp duties were shown to have the most significant fall during the period, at 9.2 percent, while Capital Gains Tax revenues were reported to have the highest increase, at 12.5 percent.

Interpretation of the tax revenue figures have already sparked heated debate among Irish political figures. Joan Burton, Labour Party Finance Spokesperson, has already claimed that Brian Lenihan is “delusional” if he believes that there is any sign of recovery, she added that if the Minister saw any indication of economic improvement, he was “dangerously in denial”. However, Brian Lenihan has already said that with three of the four most significant tax categories showing better than expected performance, it is hard to say that the growth is not apparent.

Photo by AlmazUK