A surge in corporation tax receipts may see State’s budget balanced this year
A SURGE in corporation tax receipts may see Finance Minister Paschal Donohoe balance the budget this year after he came under heavy criticism for “out-of-control” spending.
That would be the first time since 2007, before the financial crisis hit, that the State has not spent more than it has taken in tax revenues.
Exchequer returns, detailing the tax revenues and spending figures for December are due to be published on Thursday. If the numbers show a balanced budget it would be a feather in the cap of Mr Donohoe, who pushed back plans to balance the budget until next year.
The last time the State balanced its budget was in 2007 before the deficit surged to as much as 32pc of gross domestic product in 2010 as the financial crisis unfolded and the bank bailout started, with the government assuming the liabilities of private lenders’.
While Mr Donohoe has acknowledged that a surge in corporate tax receipts may not be sustainable, balancing the budget this year would help reassure financial markets and could create the fiscal space for reductions in the higher rate of personal tax advocated by Taoiseach Leo Varadkar.
Data released in November showed corporate tax revenues were €1.5bn ahead of target and Alan McQuaid at Merrion Capital said in a research report that if €600m came in as forecast in December, annual corporate tax take will top €10bn for the first time. “Back in October, on Budget day, the Department of Finance forecast an Exchequer deficit of €630m for 2018. As things currently stand, it looks like the deficit for last year will be only €100-€200m, and may even be in balance,” Mr McQuaid wrote.
In 2017 the deficit came in at 0.2pc of GDP at €700m.
The Head of the Irish Fiscal Advisory Council, Seamus Coffey, is among those who have criticised long-term spending plans, saying they “lack credibility” and saying spending was “out of control”.
It would be the first time since 2007 that the State has not spent more than it has taken in tax