THE LATEST EXCHEQUER returns show that the Covid-era deficit has been wiped out as the public finances recorded a surplus of €5 billion at the end of July.
Fresh figures from the Department of Finance show that the State’s finances have improved by €10.7 billion since the end of July last year.
The dramatic turnaround has occurred thanks to strong growth in tax revenues and the unwinding of costly Covid-19 support measures.
On a 12-month rolling basis – which is preferred by the Department of Finance – the Exchequer surplus stands at €3.4 billion.
Gross revenue for 2022 stood at €58.2 billion at the end of July, a jump of €5.7 billion (11%) compared with the same period last year.
Tax revenue stood at €43.5 billion at the end last month, a spike of €8.3 billion (23.5%) more than the same period last year.
The strong returns have been recorded thanks to very strong growth in corporation tax, income tax and VAT.
Income tax receipts of €2.5 billion were recorded last month, which is approximately €400 million (19%) more than July 2021. On a cumulative basis, €16.7 billion has been collected in income tax so far this year. This is more than €2.4 billion (17%) ahead of the same period in 2021.
Corporation tax receipts for the first seven months of the year now stand at €9 billion. This is over €3 billion ahead of the same period last year, driven by significant increases in profitability in the multinational sector.
VAT receipts stood at €11.9 billion, an increase of €2.2 billion (23%) on the same period in 2021. However, last year’s VAT receipts were depressed by Covid-19 lockdown measures.
On the spending side, total expenditure to the end of July was €53.2 billion. Of this, gross voted expenditure amounted to €45.3 billion – €1.8 billion less than the same period last year, when Covid supports were in place.
As tax revenues have been boosted by the rising cost of fuel, food, goods and services, the strong exchequer returns will lead to calls for the Government to take further steps to try and stem spiralling living costs.
Peter Vale of Grant Thornton said the Exchequer returns show the “ongoing resilience” of the Irish economy despite the “relatively negative global economic outlook.”
“Overall, seven months into the year tax receipts are running at €8.3 billion ahead of 2021, which is a remarkable position. While there will be a desire to mitigate cost of living increases as part of Budget 2023 next month, it’s likely that prudency will prevail when it comes to any tax cuts,” Vale said.
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