From Department of Finance; Department of Public Expenditure, NDP Delivery and Reform
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An Exchequer deficit of €6,682 million was recorded to end-August. This compares to a deficit of €9,452 million in the same period last year. The €2,769 million improvement in the deficit is due to increased tax revenues. The 12-month rolling Exchequer deficit, a much better indicator of the trend, is €9,547 million.
Given the timings of various periods of restrictions last year and the unprecedented nature of the impact of the pandemic, year-on-year comparisons are of limited value and may give a misleading impression of tax revenue performance. As such, a much better guide to tax outturn in 2021 is the comparison versus profile.
August is not usually a significant month for corporation tax receipts, however, this year €1,043 million was received, €797 million higher than profiled. The higher than expected receipts are due to a number of payments from some large companies, mainly in the ICT sector. It is not expected that such high receipts will be repeated in future years. Income tax receipts continue to be robust and were €140 million or 6.7 per cent higher than profiled in August, or €459 million and 26.1 per cent higher in year-on-year terms.
The recovery in excise duties to-date has been less pronounced than VAT, with receipts of €549 million in line with target in August and up by €34 million, or 6.6 per cent on the same month last year. August is not a VAT-due month; receipts in this area amounted to €137 million.
Total gross voted expenditure to end-August 2021 amounted to €53,430 million, €1,354 million or 2.6 per cent ahead on the same period in 2020 and €1,676 million, or 3.0 per cent below profile. The underspend vis-a-vis profile is the result of a number of factors including the closure of construction sites earlier in the year.
Commenting on the figures, the Minister for Finance, Paschal Donohoe T.D. said:
“Corporation tax receipts in August were unusually high, illustrating the inherent unpredictability and volatility of this revenue stream. As I have said many times, we cannot rely on such receipts over the medium to long-term. The best form of defense against the potential reduction in corporation tax is to reduce the deficit. Budget 2022 will build on the framework set out in the Summer Economic Statement, showing a credible path towards fiscal sustainability while allowing continued investment in our public services, particularly in capital infrastructure.”
The Minister for Public Expenditure and Reform, Michael McGrath T.D. said:
“At the end of August, gross voted expenditure totalled over €53.4 billion, €1.35 billion ahead of expenditure levels for the same period last year. Current expenditure stands at €49.7 billion with 68 per cent of this, some €33.9 billion, relating to spending in the Departments of Social Protection and Health. This level of spending reflects the significant resources allocated by Government to ensure that our health service has been able to respond effectively to the impacts of Covid-19, and has ensured that the necessary income and employment supports for our workers and businesses impacted by Covid-19 have been available.
“As of this week, just over 143,000 people are in receipt of a Pandemic Unemployment Payment, the lowest number of claimants since the introduction of the scheme, with the continuing fall in numbers reflecting the reopening of society and the economy. Since the beginning of this year, payments on this scheme and the Employment Wage Subsidy Scheme (EWSS) have totalled over €6.8 billion combined.
Over the coming period and into 2022, Government will continue to support the ongoing recovery in our economy recovery including through record levels of investment into our capital programme, with further details to be outlined as part of the forthcoming Budget 2022 in October”.
ENDS
Notes to editors: