UK (Commonwealth) _ Recent data from the Central Statistics Office shows that in just three years, Ireland‘s total tax receipts have increased by 50%.
In 2023, the state collected a total of €116 billion in taxes and social contributions, which was 5% more than the previous year. With a large portion of this growth taking place in more recent years, taxes in 2023 were double what they were ten years prior.
Although the growth rate in 2023 was less than that of 2022, the CSO stated that it represents a return to a more normal prepandemic growth pace. Corporation tax receipts, which have more than doubled in each of the four years since 2019 and accounted for 21% of the total received last year, were a major contributor to the most recent growth.
Corporation tax collections last year totaled €24 billion, up 5% from 2022.
Income tax made up approximately one-third of the total, amounting to €33 billion. Taking into account social contributions, the income tax amount increased by 6% from the previous year to €54 billion.
While other taxes for 2023 totaled €17 billion, up 3% from the year before, the VAT collected during the period was €20 billion, likewise 6% higher. Additionally, PRSI receipts increased by 9% to €15 billion.
In sum, direct taxes accounted for over half of the total revenue collected. The CSO observed that direct income and wealth taxes accounted for over half of all tax revenues; corporation tax and income tax, which includes PAYE, were the biggest levies in this category.
Product taxes, which included VAT and excise levies of €7 billion, made up 26% of the total.
VAT accounted for two-thirds of goods taxes, while excise accounted for the remaining 20%.
Today’s release demonstrates a sustained rise in tax receipts and Pay Related Social Insurance (PRSI), according to Elaine O’Sullivan, the CSO’s statistician in the Government Accounts Division. In 2023, Ireland’s total tax receipts came to over €116 billion.
This represented a 5% or €6 billion increase in total tax revenue receipts for 2022. Note that the €88 billion in cash-based Exchequer data for 2023 does not include PRSI and other non-Exchequer income classified as taxes.
In 2023, tax income reached €88.1 billion, which is 2.5 times higher than it was 20 years previously (figure 1A). During this time, especially in the aftermath of the financial crisis, the tax base’s composition has changed significantly.
Transaction-related income from the rising real estate market drove a dramatic increase in receipts in the years preceding the crisis; the burst of the property bubble had a significant impact on these revenue streams, causing overall tax revenues to drop by one-third from their peak. In mid-2010, tax revenues hit a low of €31.2 billion.
After the crash, we implemented structural adjustments to strengthen the resilience of the revenue base. The implementation of the Universal Social Charge (USC) and the Local Property revenue aimed to broaden the revenue base.
In the years that followed, tax revenues rose gradually, reaching €59.3 billion in 2019, shortly before the Covid-19 pandemic started. This growth was a reflection of fiscal consolidation and the broader economic recovery.
The effects of the pandemic caused the overall rise in tax revenue to stall in 2020. As the public health situation improved, tax revenue receipts increased once more, leading to a total performance in 2022 that surpassed pre-pandemic trends.
Although they grew at a noticeably slower rate last year, company tax receipts accounted for a large portion of the remarkable post-pandemic boom, rising by nearly 50% in 2022.
The primary structural change in the Irish tax system over the past ten years has been the level shift in company tax receipts. These receipts made up 15% of the entire tax revenue in 2015; last year, they made up more than 25%. Revenue from big, extremely successful international corporations, especially in the pharmaceutical, ICT, and financial industries, has been the main driver of the expansion.
In 2022, Ireland’s tax-to-GDP ratio ranked 35th out of 38 OECD nations. Ireland’s tax-to-GDP ratio in 2022 was 20.9%, whereas the OECD average was 34.0%. Ireland ranked 36th out of 38 OECD nations in 2021, according to the tax-to-GDP ratio.
In 2022, Ireland’s tax-to-GDP ratio placed it 35th¹ out of 38 OECD nations. Ireland’s tax-to-GDP ratio in 2022 was 20.9%, whereas the OECD average was 34.0%. According to the tax-to-GDP ratio, Ireland was placed 36th out of 38 OECD nations in 2021.
