Covid cost us €10bn ... and that’s just the f irst seven months
TAXPAYERS are in debt to the tune of an astonishing €10billion extra, largely due to the pand e mi c , the latest disturbing figures reveal.
The Exchequer deficit was almost €9.4billion to the end of September, which compares with a surplus of €38million last year, according to the Finance Department’s latest figures.
The drop in the balance books was primarily fuelled by spending on a rangev of measures to offset the damage of the coronavirus. Most of the extra spending was on health and social protection.
Public Expenditure and Reform Minister Michael McGrath said: ‘The expenditure increase of €10.5billion compared to last year, highlights the significant measures implemented to address the challenges from Covid-19.’
And he said that much of the public spending used to fight the pandemic would have to be repeated in 2021.
‘Social Protection spend is now projected to be more than €30billion this year,’ he said, adding: ‘A share of that additional expenditure has been to support our health service with €1.3billion ahead of profile in terms of health expenditure to t he end of September.’
In social protection, over €6billion extra was spent on Covid payments.
He said that is made up of Pandemic Unemployment Payments (PUP) of about €3.5billion so far, and the Wage Subsidy Scheme running at €2.7billion.
He said: ‘As you know, we’ve had to incur a lot of extra expenditure in education, in transport and in a number of other areas of service to maintain a level of service for the general public.
‘We anticipate that in Budget 2021, a significant portion of that Covid-related expenditure will need to be incurred again next year.’
Meanwhile, Finance Minister Paschal Donohoe has raised fears that Ireland’s low corporation tax, which attracts multinationals to the country, may change, as there is ‘intense’ debate around the subject in Europe.
He previously praised the scheme as one of the few tax takes that actually went up during the pandemic.
He said: ‘The nature of our corporation tax collection has proved to be a strength in recent months. But I will re-emphasise what I said on budget day last year, which is that the corporate tax world is changing. There is intense debate about the rules in relation to corporate tax collection in the future.’
He also tried to paint a brighter picture about our massive Covid costs, saying that while it is a ‘very, very big deficit’, it is less than the €30billion that was projected.
And, despite the alarming rise in our deficit, Mr Donohoe ruled out tax increases in the forthcoming budget.
He said he wanted to keep consumer confidence high and encourage spending as there is a pandemic-boom in personal savings, while using favourable borrowing rates to offset capital spending.
‘What we want to be doing is giving confidence to those who are saving at this rate. Confidence to spend, to invest and, when our public health guidance allows it, for them to use this money in such a way that will lead to employment growing again,’ he said, adding: ‘We are not going to be making changes in personal taxation on Tuesday week.
‘What Michael [McGrath] and I are working night and day to do is create a budget and an economic framework for the remainder of this year, to continue to rebuild confidence in our economy and in public health. Our economy will recover, Ireland will get through this. We know how hard it is for so many at the moment and all the anxiety that is there.’
Donohoe pledges not to hike taxes