Income tax holds up even as jobs hit means increased spending on Covid
THE Government recorded a budget deficit of €721m in February as a result of higher pandemic spending and a lower overall tax take.
Last month’s deficit compares to a surplus of just over €1bn recorded for the same period last year, two weeks before the country locked down due to Covid-19.
Total net voted expenditure for January and February was up 11pc on the same period last year, at just under €9bn.
That includes an increase of €1.8bn in year-on-year spending by the Department of Employment Affairs and Social Protection – mainly made up of welfare and Covid wage supports.
But the Department of Finance said that income tax has held up, despite the economy entering a third lockdown last December.
Income tax receipts of just over €1.7bn were collected in February, down just 1.6pc on February last year, before the pandemic started and a point when unemployment was at an all-time low.
Income tax receipts for the two months until the end of February 2021 stood at just over €4bn, which was up 1.4pc on the same period in 2020.
However, overall tax receipts for the month were down 9.3pc on February 2020, while tax receipts for the first two months of the year were down 9pc compared to the same period last year.
Vat receipts to end-February were down 13pc and excise duties took a 15pc hit.
Budget deficit was €721m last month
The 12-month rolling Exchequer deficit stands at just over €14bn.
“Today’s figures show the continuing impact of the pandemic on our public finances,” said Finance Minister Paschal Donohoe. “While the cost to the Exchequer has been substantial, there are grounds for optimism. Reflecting the efforts of our citizens, case numbers have declined over recent weeks. Our vaccination programme continues to gain pace and the ongoing stability in income tax receipts is an indicator of the underlying strength in our economy and a hopeful sign for securing our economic recovery when the virus is brought under control.”
Public Expenditure and Reform Minister Michael McGrath said the latest lockdown “has necessitated considerable additional welfare spending”.
“I am confident that the economy can bounce back strongly later in the year and this will deliver an improvement in the public finances.”