The Minister for Finance Michael McGrath (pictured) has said that a report on taxation in Ireland shows that there are “still real vulnerabilities” beneath the surface, despite positive headline figures.

The Department of Finance says that the report highlights the concentration of the tax base on small number of ‘tax-rich’ sectors.

Its Annual Taxation Report 2023 shows that the ICT (information, communications and technology) sector accounts for 10% of all income tax revenue, and around 35% of corporation tax.

‘Transitory revenues’

In a foreword to the report, the minister warned against building permanent spending commitments on the basis of “potentially transitory revenues”.

The report warns that recent job cuts in the technology sector could have implications for the State’s revenue stream.

Overall, it shows that tax receipts last year hit a record €83 billion – almost 40% above pre-pandemic levels.

Almost all categories showed strong increases, apart from excise duties, which were affected by Government measures to help tackle inflation.

Corporate tax receipts last year were more than double their pre-pandemic level and have increased five-fold in a decade, according to the report.

Motor fuel declining

Corporate tax has now overtaken VAT as the State’s second-largest revenue stream.

The department says that its analysis suggests that almost half of last year’s total corporation tax take should be treated as ‘windfall’.

The report states that motor fuel has been gradually declining as a share of overall excise receipts while, reflecting policy decisions, carbon-tax receipts have been increasing in importance.

The impact of lower volumes of tobacco consumption has been offset by tax increases.