Ministers will have a huge surplus of €4.415 billion at their disposal this year for one-off measures, including underpinning energy bills, before they even have to consider next year’s spending commitments, new figures from the Treasury show.
The annual white paper, which is released before every household every Friday at midnight, sets the state’s spending and revenue for the current year and forecasts what that means on a so-called “no budget basis” for the following year would 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 in 2023 to EUR 11.78 billion.
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 ultra-cautious stance has been dramatically outpaced by actual results, notably by increases in corporate taxes paid here, but also by other factors including a higher VAT and much lower costs of supporting Ukrainian refugees moving here than originally expected.
The result gives ministers a tremendous stroke of luck to help households and businesses through the expected winter energy bill crunch without having to go to markets, yet leaving a budget balance that was not expected earlier.
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 without this so-called windfall tax, the forecasts show a budget surplus in 2023.
The improvement in public finances strengthens the government’s ability to support the economy through the energy crisis caused by the war in Ukraine.
It will increase pressure from inside and outside Cabinet for a more generous budget next year, although more conservative voices will point to the need to keep a reserve amid uncertainty about the job market.
Ministers are expected to fight their way through budget lines themselves within the existing framework, including the massive and sprawling health spending.
Yesterday, 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, the Secretary of State for Public Expenditure, has offered Mr Donnelly, the Secretary of Health, a budget of just over €22 billion, including around €1.1 billion in new spending. But the Health Ministry has said the €1.1bn 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/irish-news/politics/official-pre-budget-numbers-show-44bn-surplus-this-year-to-fund-community-supports-42013771.html Official pre-budget figures show a surplus of 4.4 billion euros this year to fund community support