But spending is more than keeping pace, up €5bn on the same period last year, according to new Exchequer figures published by the Department of Finance.
Most reassuring to the Government will be the bounce-back in corporation tax, an increasingly important source of revenue for the Exchequer. Some €3.6bn was collected in May, up €0.8bn or 30.6pc, on the same month last year.
So far this year €6.3bn in corporation taxes have been collected, much the same as last year, but this represents a strong recovery after a sharp drop in the first quarter of 2024.
Overall, tax receipts of €35.2bn were collected to the end of last month, up €2.1bn on the same period last year, with income tax and Vat being the star performers. Income-tax receipts of €2.7bn were collected in May, up 5.2pc year-on-year, which indicates the underlying strength of the Irish economy.
As a Vat-due month, May always has high receipts, and this year €3.4bn was collected, up 12pc on the same month last year. This is an indication of consumer confidence, and a higher rate of spending as fears about inflation subside.
With an Exchequer surplus of €0.8bn being recorded to the end of May, compared with a deficit of €0.6bn in the same period last year, there will be huge political pressure from the Government backbenches for Finance Minister Michael McGrath to open the purse strings even more in advance of the general election expected later this year.
Expenditure is already running ahead of targets, however, with €42.9bn spent to the end of May. Gross voted expenditure was €38.8bn, some €5bn ahead of the same period last year, and €1bn ahead of profile.
Sounding a note of caution, Public Expenditure Minister Paschal Donohoe said the current expenditure figures reflect measures that were introduced in last autumn’s budget, such as social welfare increases, but “careful management of spending” by all Government departments was needed.
“This vigilance will ensure that we are able to maintain sustainable public services for our society and is essential in preserving our decision-making flexibility for Budget 2025,” he said.
Mr Donohoe added that capital spending of €3.6bn to the end of May, which was up 52pc on the same period last year, reflected the rollout of the National Development Plan, with “significant strides” being made by the housing and heritage departments.
The Finance Minister, meanwhile, noted that May is an important month for tax revenues, and the positive performance was a welcome indicator of the strength of the economy, with a record 2.71 million people at work, and incomes rising faster than inflation.
Noting the increase in corporation tax, Mr McGrath nevertheless warned that the volatility in the figures is “yet more evidence of the unreliability of these highly concentrated receipts”, and the risks this poses to the national finances.
“The fact that we are highly dependent for a large portion of our corporate tax receipts on a very small number of companies requires a decisive policy response to ensure our public finances are sustainable into the future,” Mr McGrath said.
He added that the vulnerability underscores the importance of continuing to pursue a balanced and sustainable budgetary policy. “With this in mind, Government will set out the fiscal parameters for Budget 2025 in the Summer Economic Statement in the coming weeks.”
