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Surge in tax revenues masks rise in spending

  


Finance Minister Paschal Donohoe. Picture: Frank McGrath
Finance Minister Paschal Donohoe. Picture: Frank McGrath

The Exchequer surplus rose €114m in January from a year ago to €1.64bn thanks to yet another surge in tax revenues which once again masked a sharp rise in Government spending.

Most of the improvement in revenues came from income taxes, which were €133m stronger than a year ago at €1.88bn, contributing to a 7pc rise in overall tax revenues to €5.37bn.

Voted expenditure ran 6.5pc higher than the previous year at €4.21bn.

The State ran its first structural budget surplus since before the onset of the financial crisis, aided by bumper corporation tax receipts.

This was despite overall spending running well ahead of target in the year, something Finance Minister Paschal Donohoe pledged to fix.

Spending overruns in health to the tune of €600m were blamed for the overshoot in 2018, and Mr Donohoe said his department was engaged in regular discussions over spending with health officials to ensure there were no repeats.

Since then however, serious cost overruns have emerged at the National Children’s Hospital which may now cost as much as €1.7bn.

The nurses’ strike will also challenge Mr Donohoe’s budget prudence.

Credit ratings agency DBRS warned yesterday that the darkening global outlook could pose a risk to Ireland’s credit ratings, although it noted debt levels had fallen last year thanks to strong economic growth.

“On the other hand, the ratings could face downward pressure if material downward revision in the growth outlook or a weakening in fiscal discipline cause medium-term public debt dynamics to reverse course,” it said in a report.

Mr Donohoe is to face the Oireachtas Finance Committee later today to discuss the Government’s Brexit preparations, but will also expect to face questions over nurses’ pay.

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Irish Independent


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