Ministers will have a massive €4.415 billion surplus in 2022 for one-off measures, including underpinning energy bills, before they even have to consider next year’s spending commitments, new Treasury figures show.
The annual white paper, released before each budget on Friday at midnight, sets the state’s spending and revenue for the current year and forecasts what that would carry over to the following year, on what it calls a “no-budget basis.” , ie without tax changes or changes in spending policies.
Last night’s figures show that public finances ended the year in a dramatically improved shape and a general government balance or surplus of 4.415 billion was met this year without borrowing new money.
The surplus is expected to more than double to a massive €11.78 billion in 2023.
The shift in public finances is profound.
As recently as April, Treasury Secretary Paschal Donohoe argued that early signs of fiscal strengthening were a false dawn and forecast a deficit — spending in excess of revenue — for 2022.
This extremely cautious position was dramatically abandoned by actual results, notably by the increase in corporate taxes paid here, but also by other factors including more VAT paid and much lower than originally anticipated costs of supporting Ukrainian refugees moving here.
The result gives ministers a huge stroke of luck to support households and businesses through the expected winter energy bill shock without having to go to markets, yet leaving a budget balance that was not expected at the start of the year.
Next year’s potential surplus of nearly €12 billion now makes the €6.7 billion budget package for 2023, with higher spending and tax cuts by ministers, appear relatively modest – despite next year’s figures showing a whopping corporate tax of 22.7 Reflect billions of euros that officials now expect to be paid.
That’s almost five times more than the corporate tax rate levied as recently as 2014, and the magnitude of the increase has raised big question marks about how sustainable or reliable those funds are.
To answer that question, officials who prepared the budget white paper have included alternative figures based on a possible collapse in tax revenues of more than €9 billion.
Even taking out this so-called windfall tax level, projections show a budget surplus in 2023.
The huge improvement in public finances bolsters the government’s ability to support the economy through the energy crisis caused by the war in Ukraine and will increase pressure inside and outside the cabinet for a more generous budget next year, although more conservative voices are pointing it out the need to maintain a reserve in the face of uncertainty in the labor market, particularly in the technology sector, and the threat of a recession.
Even within the existing framework, the understood ministers are struggling through the budget lines, including the massive and sprawling health spending.
On Friday, key budget talks over the level of health spending next year are said to have stalled amid a row between Fianna Fáil ministers Michael McGrath and Stephen Donnelly and their officials.
Mr McGrath, Secretary of State for Public Expenditure, has offered Mr Donnelly, Secretary of Health, a total budget of just over €22 billion, including around €1.1 billion in new spending.
But the health ministry has said the €1.1 billion on the table will only cover existing spending commitments, with no money left over for new measures.
Mr. Donnelly wants to eliminate hospital fees, reduce prescription fees, expand free GP care and free contraception, and begin providing publicly funded IVF.
“There will be new measures and a waiting list initiative, they just have to prioritize where they want to spend the extra money they get,” a source said.
https://www.independent.ie/news/ministers-will-have-a-massive-44bn-surplus-available-in-2022-for-one-off-measures-42013720.html Ministers will have a massive €4.4 billion surplus available for one-off measures in 2022