Highest ever tax take of €68.4bn – Exchequer returns
The Department of Finance has recorded the highest ever tax take of €68.4 billion, pushing the Exchequer deficit down to €7.3 billion.
According to the latest Exchequer figures, tax receipts were up by €11.2 billion (19.7%) on 2020. This was the highest ever tax yield, over €9 billion ahead of the previous highest yield reached in 2019.
Growth was robust across virtually all tax heads, with particularly strong performances in income tax, VAT and corporation tax.
Cumulative income tax receipts of €26.6 billion for the year were up by €3.9 billion (17.4%) on 2020. This reflects the ongoing recovery in the labour market along with growth in wages in the sectors insulated from the pandemic.
Corporation tax receipts of €15.3 billion were collected in 2021, 29.5% ahead of 2020.
€1 in every €4.50 collected in tax is corporation tax.
VAT receipts for the year came to €15.4 billion, 24.3%, higher than collected in 2020, which reflects the rebound in consumption as the economic recovery took hold.
Total voted spending for 2021 amounted to €87.5 billion, which was 2.6% ahead of spending last year, and 1.5% below the full-year allocation for 2021.
The Department said the improvement in the deficit from the Budget estimate of €13.25 billion is primarily the result of a significant under-spend in public expenditure as well as better than expected tax receipts.
“While uncertainty remains around the trajectory of the pandemic, particularly in light of the omicron variant, the very robust performance in 2021 is a positive indicator for the resilience of the economic recovery heading into 2022,” the Department said.
Motor tax receipts of €907 million were collected in 2021, 3.4% lower than in 2020.
Customs receipts of €526 million to end-December were 91% higher than 2020. The increase in customs revenues relates to the impact of the UK’s departure from the EU customs union, whereby goods coming from the UK whose country of origin is not the UK are subject to customs duties.
The Exchequer collected a record amount in tax last year, despite the pandemic.
The ongoing Covid pandemic has disrupted thousands of businesses and at times, forced hundreds of thousands of workers to seek government assistance.
However, when restrictions were relaxed, the economy bounced back much stronger than anyone had predicted. And parts of the economy not directly exposed to Covid restrictions continued to thrive.
This has meant a record tax haul for the Government of €68.4 billion.
It has pushed the Exchequer deficit for 2021 down to €7.4bn. As recently as October, it was predicted to be over €12bn.
Corporation tax also continues to surprise coming in at a record €15.3bn – the highest amount ever collected and now equal to our VAT take.
The lower than forecast deficit was also helped by the Government spending approximately €2bn less than it had planned.