Tax take down by half a billion euro in January
THE amount of Vat collected on pre-Christmas trading was well down on the previous year despite indications of strong retail sales.
The latest Exchequer figures show that severe public health restrictions in place since Christmas mean the State’s public finances are off to a rocky start.
Public Expenditure and Reform Minister Michael McGrath said the numbers are in line with what was anticipated in Budget 2021 – which had assumed no vaccines this year and allowed for spending to remain elevated.
“These developments vindicate our Budget strategy of making over €5.4bn available in funding for a Contingency Reserve and Recovery Fund, which we are deploying to support incomes and fund essential health and education expenditure while preparing the economy for recovery later this year,” he said.
The latest numbers show tax revenues in January were down 9pc compared to the same month last year, including big falls in Vat and excise duty, while social welfare spending was 42pc higher.
January is an important month for Vat collection which is usually boosted by pre-Christmas trading, however, Vat receipts last month were down €340m from last year.
That reflects the hit to trading from the successive lockdowns in November and late December, and suggests CSO retail sales data that showed a rise in December spending has not translated into the tax take.
The Exchequer figures record a total €520m drop in cash terms of tax collected versus the same month last year.
Despite heavy job losses as the latest Level 5 lockdown kicked in, income tax receipts have held up, and even rose €85m from the January 2020 tally.
However, spending by the Department of Employment Affairs and Social Protection was up €800m year-on-year as pandemic wage supports were drawn down.