THE STATE HAS a deficit of €1.1 billion over the last year, despite a major improvement in tax revenue following the conclusion of most public health measures, according to the latest Exchequer returns.
The figures are distorted due to restrictions which were in place at this time last year, while public finances are expected to be hit by the war in Ukraine.
An Exchequer deficit of €1.1 billion was recorded at the end of April, compared with a deficit of €7.6 billion in the same period last year.
The €6.5 billion improvement in the balance has been attributed to strong growth in tax revenue, with tax receipts of €21.1 billion to end-April, up over 30 per cent from the previous year.
“The annual increase is, however, distorted by the stringent level-5 restrictions that were in place in the opening months of last year,” a spokesman said in a statement.
“On a 12-month rolling basis, the Exchequer recorded a deficit of €0.8 billion.”
At €9.5 billion to end-April, income tax receipts were up almost 20 per cent on an annual basis, and reflect the strength of the labour market with employment, for instance, now at its highest level ever.
Reflecting the recovery in consumer spending, VAT receipts to end-April amounted to €6.0 billion, up almost 30 per cent on the same period last year.
However, the year-on-year comparison is impacted by a number of factors including the public health restrictions that were in place last year.
Corporation tax receipts amounted to €2.3 billion to end-April, up by €1.7 billion relative to last year although this reflects, in part, a timing issue.
Total gross voted expenditure to end-April amounted to €25.3 billion, €1.4 billion or 5 per cent below the same period in 2021.
This is driven by a decline in expenditure in the Department of Social Protection due to the impact of Covid restrictions in early 2021 and the resulting increased expenditure on supports for people and businesses.
Health expenditure to end April amounted to €7 billion, up €0.6 billion on the same period in 2021. This reflects increased supports to the sector and the measures implemented as part of the health and social care Covid action response.
Commenting on the figures, the Minister for Finance Paschal Donohoe said they show a strong momentum in the tax receipts continuing into the second quarter.
“While the annual comparisons are distorted due to a number of factors, in particular the level 5 restrictions that were in place last year, the underlying trends are a positive sign of the strength of the economic recovery,” he said.
However the Fine Gael TD said the war in Ukraine will have a further impact.
“It is also important to stress that today’s figures are, of course, backward looking. We expect economic activity and the public finances to be significantly affected by the war in Ukraine.”
We have faced many challenges in recent years – Brexit, Covid-19, and now war in Europe. In each one of these, this Government has demonstrated our ability to be agile and responsive. We know that there are difficult times ahead but we also know that we face them from a strong position.”
Minister for Public Expenditure and Reform Michael McGrath said it is expected that costs associated with supports for refugees “can be met from within the overall Government Expenditure Ceiling in 2022″.
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