An Exchequer surplus of €5 billion was recorded last year, a €12.4 billion swing from the €7.4 billion deficit recorded in 2021. The improvement reflects both the strong growth in tax revenue and the decline in Covid-related public expenditure.
On a more comprehensive general government basis, this is consistent with a surplus of c. €5.2 billion, or 2 per cent of GNI*. Excluding estimates of windfall corporation tax receipts, this is consistent with an underlying general government deficit in the region of €5¼ billion.
Aggregate tax receipts closed the year at €83.1 billion, ahead of 2021 by €14.7 billion (22 per cent). Income tax receipts of €30.7 billion were collected in the year, up by €4.1 billion (15 per cent) on 2021, reflecting the post-pandemic recovery in employment.
VAT receipts amounted to €18.6 billion last year, €3.2 billion (20½ per cent) ahead of a year earlier, reflecting the release of pent-up consumer demand following the full elimination of mobility restrictions in the first quarter of last year.
Corporation tax receipts ended 2022 at €22.6 billion, ahead of the previous year by €7.3 billion (48 per cent). This means that, for the first time ever, corporation tax receipts were the State’s second-largest income stream last year. That said, a significant part of this revenue stream is expected to be once-off in nature. It is also notable that the corporation tax figures for December were below levels expected by the Department of Finance.
In contrast, excise duty receipts closed the year at €5.4 billion, down €0.4 billion (7 per cent) on 2021. This is, in part, driven by the impact of Government policy introduced to help address increases in the cost of living.
Total gross voted expenditure in the year amounted to €88.8 billion, €1.2 billion or 1.4 per cent ahead of the same period in 2021.This reflects the allocation of funding to address cost of living pressures, provide for Ukrainians fleeing the war, and also continue to provide for improvements in public services, social supports, and infrastructure with capital spending of almost €11 billion.
Commenting on the figures, the Minister for Finance, Michael McGrath T.D. said:
“The end-2022 Exchequer figures show a large headline surplus was recorded last year. This reflects a number of factors, including robust income tax and VAT receipts, both of which reflect the strength of the post-pandemic recovery in demand and employment. The phasing out of Covid-related expenditure is another reason for the surplus last year.
“By far the most important factor behind the headline surplus is the strength of corporation tax revenue – receipts from this source have doubled since just before the pandemic. My Department estimates that around half of these receipts are potentially at risk – if these receipts were excluded, we would instead be facing a significant deficit. That is why Government has acted to mitigate this vulnerability by transferring part of this windfall to the National Reserve Fund to rebuild our fiscal resources.
“It is also important to stress that today’s figures are, of course, backward looking. They do not offer a guide as to the challenges that we will have to address going forward. Keeping the public finances on a sustainable trajectory puts us in the best position to meet these future challenges. That is what this Government will continue to do.”
The Minister for Public Expenditure, National Development Plan Delivery and Reform, Paschal Donohoe T.D. said:
“Today’s figures demonstrate the significant support provided by Government throughout 2022. While the challenges of the pandemic began to recede other challenges have emerged. These challenges required a flexible approach to budgetary policy throughout 2022, with additional funding allocated where required. Additional supports have been introduced for people, households and businesses to assist them with the impact of increasing prices. Humanitarian supports have been put in place to welcome and provide for those arriving from Ukraine. This response was made possible by the strong position of our public finances.
“Looking forward the 2023, Revised Estimates have provided gross expenditure of over €91 billion. This will allow us to fund our public services to meet the challenges arising from Covid and the war in Ukraine, while also providing key investment to enhance public services, our education and healthcare systems, and our infrastructure including housing and transport networks.”
Fiscal Monitor December 2022