An Exchequer surplus of €7.3 billion was recorded in the year to end-October 2022. This compares with a deficit of €7.4 billion in the same period last year. The almost €15 billion improvement in the Exchequer balance was primarily driven by strong growth in tax revenue, with tax receipts of €63.9 billion to end-October, up €13 billion (over 25 per cent) on an annual basis. The annual increase is, in part, flattered by the stringent level-5 restrictions that were in place in the opening months of last year as well as a number of other technical factors.
At €23.9 billion to end-October, income tax receipts remain robust, up over 15 per cent compared to last year, reflecting continued strength in the labour market.
Corporation tax receipts of €2.3 billion were collected in October, up over €0.8 billion compared to the same period last year. This increase primarily relates to profits in a small number of companies in the multinational sector, which are unlikely to be repeated next year. Overall, corporation tax receipts amounted to €16.2 billion to end-October, up by €6.6 billion relative to last year driven by strong increases in profitability in the multinational sector.
Reflecting the recovery in consumer spending, VAT receipts to end-October amounted to €15.5 billion, up almost 23 per cent on the same period last year. However, the annual comparison is impacted by a number of factors including the public health restrictions that were in place last year. At the same time, VAT receipts were also 23 per cent higher than in the same period in 2019 (i.e. pre-pandemic).
At €4.5 billion to end-October, excise duty receipts were down 2 per cent on an annual basis. The much weaker performance of excise reflects, in part, Government policy introduced to tackle increases in the cost of living.
Total gross voted expenditure to end-October amounted to €66.5 billion, €1 billion or 1.5 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.
Gross voted current expenditure was €61 billion at end October; €1.3 billion ahead of profile, reflecting additional priority funding for non-core supports including the cost of living measures, Covid supports and the State’s response to the War in Ukraine.
Gross vote capital expenditure remains below profile at €5.4 billion, but reflects €0.4 billion additional expenditure in comparison to the same period last year.
Commenting on the figures, the Minister for Finance, Paschal Donohoe T.D. said:
“Today’s figures show that tax receipts remain strong at the start of the fourth quarter. However, the strength of potentially volatile corporate tax receipts continue to provide an artificially positive picture of the public finances. As I have warned on many occasions, while these receipts are welcome, it is imperative that that Government does not build up permanent fiscal commitments on the basis of revenues that may prove transitory.
Budget 2023 was, of course, a ‘Cost of Living Budget’ focused on mitigating inflationary pressures. The Government has aimed to strike a delicate balance between providing assistance to those suffering the most but without adding fuel to the fire of inflation, while ensuring that we retain sufficient firepower to respond to further challenges over the coming years.
That is why I allocated €2 billion to the National Reserve Fund this year, with a further €4 billion to be transferred next year. This policy instrument is aimed at further enhancing the resilience of the public finances and will enable the Government to respond in a pro-active manner should risks materialise over the coming period.“
The Minister for Public Expenditure and Reform, Michael McGrath T.D. said:
“Expenditure to the end of October reflects the increased funding provided by Government throughout the year to support public services, households and the economy. This demonstrates a responsive approach to the external challenges faced by our economy and society, including the ongoing response to Covid-19, the War in Ukraine and the increased cost of living.
These figures reflect the first stages of the Cost of Living Supports announced as part of Budget 2023 including Social Welfare payments and the first winter electricity credit which will be seen on household electricity bills over the coming weeks.
Government has introduced a comprehensive package of supports which will provide assistance over the coming months and into 2023. These supports have been made possible by the careful management of fiscal policy and the strong economic recovery supported throughout the year.“
ENDS
Fiscal Monitor October 2022