Spending on health and income supports continue:
– Ministers Donohoe & McGrath
- Today’s Exchequer figures show that tax revenues in July were €5.7 billion, €630 million, or over 12 per cent higher than profiled and €1.4 billion up on the same period last year;
- Income tax receipts were €2.1 billion in July, €100 million or 5 ½ per cent over profile and €500 million higher than the same month last year;
- At €2.5 billion, VAT receipts in July were very strong, €350 million, or nearly 17 per cent higher than profiled and €865 million higher than July 2020;
- Total gross voted expenditure to end-July 2021 amounted to €47.2 billion, €1.3 billion or 3 per cent ahead on the same period in 2020 and €1.8 billion, or nearly 4 per cent below profile.
- The 12-month rolling Exchequer deficit stands at €10.7 billion.
An Exchequer deficit of €5,746 million was recorded to end-July. This compares to a deficit of €7,405 million in the same period last year. The €1,659 million improvement in the deficit is due to increased tax revenues. The 12-month rolling Exchequer deficit, a much better indicator of the trend, is €10,657 million.
Given the timings of various periods of restrictions last year and the unprecedented nature of the impact of the pandemic, year-on-year comparisons are of limited value and may give a misleading impression of tax revenue performance. As such, a much better guide to tax outturn in 2021 is the comparison vs profile.
July is a VAT-due month and reflecting the gradual easing of public health restrictions receipts were very strong. Some €2,476 million was received, €354 million or 16.7 per cent above profile and €865 million up on a year-on-year basis. The recovery in excise duties has been much less pronounced, with receipts €16 million or 3 per cent above profile in July and down €69 million on the same month last year. The disconnect between VAT and excise receipts (both linked to consumer spending) is the result of a much lower fall in excise in 2020 i.e. a higher baseline. Income tax receipts continue to be robust and were €108 million or 5.4 per cent higher than profiled in July, or €506 million and 31.8 per cent higher in year-on-year terms.
Total gross voted expenditure to end-July 2021 amounted to €47,157 million, €1,316 million or 2.9 per cent ahead on the same period in 2020 and €1,805 million, or 3.7 per cent below profile. The underspend vis-a-vis profile is the result of a number of factors including the closure of construction sites earlier in the year.
Commenting on the figures, the Minister for Finance, Paschal Donohoe T.D. said:
“Tax receipts in July, particularly VAT returns, reflect the opening-up of our economy and are a really positive signal as we emerge from the pandemic. While there is still a high degree of uncertainty the outstanding success of our vaccination programme means that we can look forward with optimism to a sustainable and broad based recovery.
However, as noted in the Summer Economic Statement a few weeks ago, it will be essential that we strike the right balance between maintaining temporary supports to businesses and households going forward, while bringing the public finances back to a sustainable position in the coming years.”
The Minister for Public Expenditure and Reform, Michael McGrath T.D. said:
“At the end of July, gross voted expenditure totaled nearly €47.2 billion, an increase of €1.3 billion on expenditure over the same period last year. Within the current expenditure amount of €44.2 billion, €19 billion is in the Department of Social Protection with spending in the Department of Health at €11.2 billion. Together, these Departments account for over two thirds of current spending so far this year. This reflects the significant resources allocated by Government to ensure that our health service can continue to meet the needs of our people while responding to Covid-19, and to provide the necessary income and employment supports for our workers and businesses that are still impacted by Covid-19.
“July’s expenditure reflects measures agreed by government in the Economic Recovery Plan, including the extension of the Pandemic Unemployment Payment and the Employment Wage Subsidy Scheme. With the success of the vaccine rollout, we are continuing to see a recovery in the economy and society with the numbers in receipt of the Pandemic Unemployment Payment falling to just over 163,000 - the lowest level since the scheme was first introduced in March 2020. Government will continue to support the recovery over the period ahead including through progressing with the record capital programme”
Fiscal Monitor July 2021
ENDS
Contact:
pressoffice@finance.gov.ie pressoffice@per.gov.ie
Notes to editors:
- Tax profiles for income and corporation tax have been amended to take account of the revised aggregate estimate included in the Summer Economic Statement.
- Tax revenue last year amounted to €57.2 billion.
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