The economy continues to show remarkable resilience in the face of severe global threats, with the latest figures showing that the Treasury ran a €5 billion surplus in the seven months to July. This compares to a deficit of 5.7 billion euros at this time last year – or an improvement of 10.7 billion euros since the beginning of the year.
Overall, VAT revenues generated almost 12 billion euros, an increase of 2.2 billion euros or 23 percent compared to the same period in 2021. This is partly due to the higher cost of living. Consumers pay more for goods and services, and this translates into higher government revenues.
There have been and will be calls for the government to be cautious about next month’s budget, and indeed there are many reasons to be cautious.
Not for the first time, corporate tax receipts are beating expectations. This may remain so for some time, but it would be wise not to rely too heavily on this tax. In fact, the Treasury Department has said it is “very concerned” about the country’s reliance on the tax. The country’s legacy debt remains high and it would also be prudent for the government to run a budget surplus for a while.
However, there is no doubt that many people are in serious trouble as the cost of living continues to rise. The war in Ukraine has had a serious impact on energy and food prices, the impact of which is evident at the fundamental level.
Today’s Sunday independentThe /Ireland Thinks opinion poll shows that more than 90 percent of people are now feeling the rise in food prices. In fact, 25 percent of respondents say they personally know someone who receives grocery deliveries. That may seem like a low percentage, but it actually represents an extraordinarily large number of people.
The government has already signaled that the September budget will be almost exclusively about relieving people of the cost of living. That’s how it should be. There’s a time to be careful and there’s a time to be inventive. There is talk of a new 30 percent tax rate and a windfall tax for energy companies.
Whatever the government decides to do, it is evident that the current tax hike in the treasury is due in large part to the higher prices people are paying. Over time, rate hikes will further limit the amount of money people have to spend.
Now is the right time for the government to dig deep so it can maximize a package of measures to ease the impact of the rising cost of living on people.
The increased cost of living, from food prices to energy costs, is expected to push many more households into poverty or hardship. Some charities define poverty as an inability to afford basic needs such as food, clothing and heating.
There are many requirements for government resources. We live in a time of urgent need, from the humanitarian refugee crisis in Ukraine to the climate emergency. But nothing is more urgent than the decisions many households will have to make this winter – whether to heat their homes or eat a hot meal.
As a sign of the government’s success, no one should have to hit this year.
https://www.independent.ie/opinion/editorial/budget-2023-dont-make-families-choose-between-heating-and-eating-41894669.html Budget 2023: Don’t let families decide between heating and eating