Inflation impacts strong tax receipts for Quarter 1 2022

Commenting on Exchequer figures for the first quarter of 2022, Tom Woods, Partner and Head of Tax at KPMG, said the influence of inflation in the strong tax receipts for Quarter 1 2022 should be recognised. “It’s been a strong first quarter to 2022 in terms of tax receipts and this ties in with high levels of business activity we have been seeing on the ground among our clients. Income tax receipts continue an upward trajectory with 16% or €943 million more tax collected in Quarter 1 this year compared to last year. This reflects the buoyancy of the Irish labour market.  The skills shortage and inflationary pressures are also likely a factor in the hike in income tax receipts”.

VAT receipts to the end of March 2022 are up €1.4 billion or 30% on the same period last year. Quarter 1 2019 is a fairer comparison which indicates that Quarter 1 2022 VAT receipts are 17% higher.  Tom added that “VAT is a barometer of consumer spending. However, as VAT applies to the price of goods and services, some of the increase in the VAT take for Quarter 1 is no doubt derived from rising prices felt by Irish businesses and consumers since the start of this year.” 

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