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The stark economic impact of the coronavirus is evident in the first quarter Exchequer returns for this year.
Revenue from tax in March was almost €1bn lower than the same month last year.
The decision by many companies to defer VAT payments also meant that VAT payments were half the level they were this time last year, which indicates the difficult period many businesses have gone through.
Live register
The live register has seen an exceptional rise, with over 500,000 people now in receipt of payments from the Government.
The number of people who lost their jobs include many farmers with off-farm employment.
“Today’s live register figures show an unprecedented number of people in receipt of unemployment-related transfers,” Minister Paschal Donohoe said.
“This is not unexpected, given the massive short-term disruption to economic activity that is necessary to preserve livelihoods. The Government is making these income supports available to cushion the economic shock.”
Minister Donohoe pointed out that despite the fall in economic activity, the economy had been in good shape before the pandemic and with Government support it was expected to pick up again.
“Once the virus is under control, it is expected that the economy can and will recover quite rapidly,” Minister Donohoe said.
“The Government is working to ensure that there will be minimum reduction to productive capacity, so that firms and workers can resume economic activity as soon as possible.”
Job losses
However, Peter Vale, a tax partner at Grant Thornton Ireland, was not so positive, pointing out that income tax receipts and corporation tax receipts were likely to be hit as people lost their jobs and transactions between customers and businesses ground to a halt.
It could make for some tough decisions come budget time in October
“In the past, corporation tax receipts in Ireland acted as a buffer against any weaknesses elsewhere. This will not be the case in 2020, with May receipts being the first major indicator of the scale of decline,” Vale said.
“With limited transactions and deals expected in the coming months, we can also expect a large drop off in capital tax receipts.
“While the scale of the drop is difficult to predict, it is clear that future months will be equally challenging, with the possibility of a corporation tax windfall helping to balance the books looking very unlikely. It could make for some tough decisions come budget time in October."
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