The Government used above-expectations corporation tax receipts to pay for a €1 billion overrun in its health budget last year.
The latest exchequer returns, published by the Department of Finance, show the economy generated a “general government surplus”, a wider measure of the Government’s financial position that encompasses items such as PRSI receipts and income from semi-State bodies, of €7.8 billion in 2023.
This was €1 billion less than the Government forecast in October’s budget. Officials confirmed the updated figure reflected additional spending primarily on health in the final part of 2023.
Minister for Health Stephen Donnelly said late last year he was seeking additional net funding for health of €964 million above his original allocation.
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He said the health service had experienced significant increases in demand, largely driven by population growth and an increase in the proportion of the population aged over 65.
[ Exchequer surplus drops to €1.2bn from €5bn in 2022Opens in new window ]
[ State had second highest public healthcare spend per person in EU in 2022Opens in new window ]
The Government’s year-end exchequer returns show gross voted spending for last year amounted to €94.7 billion, up by €5.9 billion or 6.9 per cent on 2022.
“This expenditure reflects the Government’s dedication to addressing external challenges comprehensively, encompassing cost-of-living packages, aid for those affected by the Ukraine war, and supporting our public services with the legacy impact of the pandemic,” Minister for Public Expenditure Paschal Donohoe said.
Total tax receipts came to a record €88.1 billion in 2023, up by €5 billion or 6 per cent on the previous year driven by strong growth in income tax, VAT and corporation tax.
The star performer was once again corporation tax, which generated a record €23.7 billion, marginally above the department’s forecast, and against a headwind of declining global growth.
Minister for Finance Michael McGrath said: “Indications are that pandemic-era surge in exports in a small number of sectors – which drive corporate profitability in Ireland – are now unwinding; this would mean more modest growth in corporation tax receipts in the coming years.”
He said the 50 per cent jump in corporation tax in 2022 had morphed into a more modest 5 per cent lift last year,
Despite deteriorating global conditions, he said his department was still expecting receipts from the business tax to hit a record €24 billion this year.
[ Public finances: 2023 may go down as tax sweet spot but storm clouds loomOpens in new window ]
The figures also highlighted a substantial reduction in interest costs on the national debt from €3.7 billion to €3.17 billion.
Chambers Ireland chief executive Ian Talbot said: “Particularly in light of global challenges, the surplus shown in the 2023 exchequer returns indicates much to be positive about for the Irish economy.”
“Record levels of employment and the extraordinary turnaround in our economy since the dark days of 2008-2010 give grounds for cautious optimism as we move into 2024,” he said.
“2024 threatens to be another challenging year. Ongoing wars, new threats to global trade and several important elections globally will continue to overhang the global economy and trade,” Mr Talbot said.
Economist Simon Barry noted that 2023 marked the third consecutive year in which each of the “Big Three″ tax channels – income tax, VAT and corporation tax – recorded their own individual record receipt years, which he described as a “testament to the post-pandemic strength of both corporation and non-corporation tax receipts in the past few years”.
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