Record year for tax revenues leaves Exchequer surplus of almost €2bn

2017 was a record year for tax revenues with the government taking in €50.7bn.

It leaves an Exchequer surplus of almost €2bn, a year-on-year improvement of €3bn.

Proceeds from the state's sale of AIB are largely to thank for the surplus last year.

Exchequer Returns for 2017 show "continued strengthening and improvement in the economy", according to the Finance Minister.

The end-December 2017 Exchequer Returns released today show an Exchequer surplus of €1.909bn.

The figure comes as a year-on-year improvement of €2.927bn.

Minister Paschal Donohoe welcomed the returns.

"Today's Exchequer returns [...] represent a very solid performance and clearly underscores the improving economy. This in turn translates into strong revenues which is funding our delivery of public services and investment in key infrastructure," he said.

"This, in turn, translates into strong revenues which is funding our delivery of public services and investment in key infrastructure," he added.

The underlying deficit of €1.525bn gives an underlying year-on-year improvement of €1.093bn.

Tax revenues were up 6% year-on-year to €50.7bn on profile.

“Reflecting our broadly-based recovery, all tax headings have recorded annual growth, with overall receipts now 60% above our 2010 low point," he said.

The Minister said an increase in gross voted expenditure reflected the Government's commitment to meet housing pressures.

“On the spending side, gross voted expenditure at €58.6 billion is up 4.6% reflecting the Government’s commitment to deliver services that meet critical social and economic needs," Minister Donohoe added.

"Demonstrating this Government’s priority to meeting our housing pressures, gross voted expenditure by the Department of Housing, Planning & Local Government is up 52% year-on-year," he said.

“This fiscal outturn provides a good platform to start 2018. However, we remain vigilant to the potential challenges we face, including Brexit. We will continue careful management of the public finances, including the focus on reducing our debt burden and continuation with competitiveness-oriented policies."

Labour's Finance Spokesperson also welcomed the surplus but said it highlighted a need to increase targeted investment to tackle crises in health and housing.

"The Exchequer surplus of nearly €2 billion is good news, and flattered by the sale of AIB shares, but it stands in stark contrast to the ongoing crisis in housing, health and the damage caused by recent floods," Joan Burton said.

"Leprechaun economics continues to haunt Ireland as Minister Donohoe sits on his pot of gold while public services urgently need investment," she added.

She said recent storms showed the Government had failed to "dequately build and invest in flood defences and climate proof our economy is causing huge disruption".

Economics experts at Davy Research said the figures put the Government within touching distance of budget surplus.

It expects the deficit to equal 0.3% of GDP in 2017, falling to 0.2% in 2018.

Davy raised concern over the increased reliance on corporation tax, now accounting for 16% of tax revenues and driving much of the tax outperformance.

"The volatility of corporation tax adds uncertainty to the Government’s revenue base as demographic and infrastructure pressures significantly add to spending in the coming years," it said.

Expenditure related to the General Government Deficit ended the year €162m, or 0.2%, below profile, according to Davy.

The outperformance has been driven by lower EU budget contributions and debt interest costs adding up to €590m in savings against profile, offsetting an overspend in voted current (€436m, +0.8%) and capital (€44m, +1%) spending; however, these over-runs were broadly absorbed in supplementary estimates in Budget 2018.


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