January tax receipts are already above the peak figures of 2022

Public finances are starting 2023 stronger than even last year’s record tax revenues had caused it.

In January, government revenues were increased by additional taxes paid in the amount of 800 million euros compared to the same month last year and 300 million euros from the sale of AIB shares.

The budget surplus of 2.8 billion euros in January compares to a surplus of 2.2 billion euros in the same month last year. January isn’t a big month for corporate income taxes, so the numbers reflect income tax and sales tax, traditionally the state’s two biggest sources of revenue, though the better sales tax number is partly due to a technical factor, officials said, but that’s factored in too Balance sheet increased by 400 million euros.

Strong income tax and VAT figures indicate the resilience of the so-called real economy, including spending over Christmas, and suggest Ireland has avoided a looming recession.

On a rolling 12-month basis, which the Treasury Department, led by new Secretary Michael McGrath, believes is a more appropriate measure of trend, the Treasury recorded a surplus of 5.6 billion euros.

On the spending side, total spending in January was 6.8 billion euros, down from January last year, although so-called ‘matched spending’, which is the result of budgetary decisions, has increased.

The heavy flow of cash into public finances is likely to mean continued pressure on ministers to maintain cost-of-living support as the public continues to grapple with huge energy bills, higher food prices and rising borrowing costs, channeling funds to deal with the persistent housing shortage.

The January data comes after estimates from Europe’s statistics agency Eurostat last week showed that Ireland had a larger budget surplus than any other EU country in the third quarter of 2022.

Seasonally adjusted, Ireland’s budget surplus was among the highest in the EU27 and the Eurozone20 at 3.1 percent of gross domestic product (GDP).

Figures released by Eurostat, the EU’s statistical office, show that there were only six countries, including Ireland, with a seasonally adjusted budget surplus in the third quarter.

The EU average was a deficit of 3.2 percent, while in the 20-member eurozone it was a deficit of 3.3 percent.

Seasonally unadjusted – excluding things like VAT rebates due to higher holiday spending or months when income or corporate taxes were due – Ireland had the fifth-highest surplus at 2 percent of GDP.