Minister for Public Expenditure, Michael McGrath, and Finance Minister, Paschal Donohoe
Government spending is €2.6 billion, or 3.4%, behind target.
The stronger than expected recovery in large parts of the economy is feeding through to higher taxes.
Consumer spending has boosted VAT receipts which are running just over €1 billion ahead of target and are up just over 24% – or close to €3 billion – for the eleven months of the year to the end of November, compared to the same period in 2020.
Corporation tax delivered another unexpected boost. It’s now running 26% – or almost €2.8 billion – ahead of what the government expected it would collect by the end of last month.
That includes €464 million euro taken off the tax through payments to companies under Covid support schemes.
Income tax is also just over €1 billion ahead, although this is distorted by comparison with last year when the tax due date for the self-employed was delayed to December.
Meanwhile, the government looks set to spend less than it planned this year. Voted expenditure to the end of November is running almost €2.7 billion, or 3.4%, below target.
November is the largest tax collection month of the year, and the most important month for income and corporation taxes.
“Tax receipts to end-November offer another positive indicator as to the strength of our economic recovery over recent months,” the Minister for Finance, Paschal Donohoe said.
“VAT receipts, in particular, reflect the significant rebound in consumer spending, while the income tax performance reflects the ongoing recovery in the labour market. Corporation tax receipts in November were very strong, reflective of a very robust performance of many higher-technology sectors during the pandemic,” the Minister added.
By the end of November, gross voted spending had come to almost €75 billion – around €1.25 billion ahead of spending levels for the same period last year.
€68.5 billion of that was accounted for by current spending, with four in every five euro of this – just under €56 billion – relating to spending in the frontline Departments of Education, Social Protection, Health, and the Department of Further and Higher Education.
“This spending reflects the Government’s continued focus on protecting the most vulnerable in society and prioritising core social services against the impacts of Covid-19,” Minister for Public Expenditure and Reform, Michael McGrath said.
“Budget 2022 was prepared in line with the medium term fiscal strategy set out in July’s Summer Economic Statement. This sets out a clear framework out to 2025 to deliver sustained improvement in public services and much needed infrastructure investment,” he added.