MID-YEAR EXCHEQUER RETURNS
Strong growth in Corporation Tax and Income Tax driving strong Exchequer position. Government continues to spend aggressively.
In what is possibly and most probably an election year, the fiscal position continues to be strong, at least in terms of tax receipts, and this continues to set a positive backdrop for budget 2025 in early October. Ireland’s Government debt is projected by the NTMA to end 2024 at 41.5 per cent of GDP and 72.1 per cent of GNI*. A high level of debt, but easily manageable provided economic activity, and particularly corporate activity, continues to drive tax revenues. The omens so far in 2024 are still positive in that regard.
An Exchequer surplus of €3.1 billion was recorded in the first six months of this year. This compares to a surplus of €0.3 billion in the first half of 2023. The first half of 2023 was distorted by the transfer of €4 billion to the National Reserve Fund.
Tax receipts of €44.7 billion were collected, which is €3.8 billion or 6.2 per cent ahead of 2023. This tax revenue buoyancy was driven primarily by strong growth in income tax and corporation tax, and to a lesser extent VAT.
Income tax receipts totalled €16.7 billion, which was €1.2 billion or 7.5 per cent higher than in the first half of 2023. This reflects the ongoing strength of employment and solid growth in wages. A small segment of the Irish working population continues to pay a significant amount of income tax.
The VAT take at €10.9 billion was €635 million, or 6.2 per cent ahead of the first half of 2023. June is a non-VAT month, but the take in June was 56.7 per cent lower than June 2023. There has been a slowdown in consumer spending this year. No surprises there.  Â
Corporation tax receipts totalled €12.17 billion which is €1.6 billion or 15.4 per cent higher that the first half of 2023.  The corporation tax take in June at €5.9 billion, was €1.6 billion or 38.2 per cent higher than in June 2023.Â
Gross voted government expenditure totalled €47.1 billion, which was €5.2 billion or 12.4 per cent higher than the first half of 2023. Of this total, gross voted current expenditure was €42.3 billion, which was 9.2 per cent ahead of the first half of 2023. Gross voted capital expenditure totalled €4.7 billion, which was 51.6 per cent ahead of the first half of 2023. Government spending continues to grow very strongly. It would be nice to get an assessment of the quality of this spend rather than the monetary quantity.
In other news, the unemployment rate in June edged up to 4.2 per cent, from 4 per cent the previous month, but is still lower than the 4.4 per cent rate in June 2023. Unemployment has fallen by 4,100 over the past year, and now stands at 117,100.
This is indeed good news.
However, there is one dark cloud on the horizon we need to address and that is Ireland's dreadfully precarious energy situation.
There is opposition to solar farms to offshore and onshore wind farms nuclear options and the dependence on vulnerable undersea cables and pipelines.
Jim is more than familiar with the solar farm issue in Waterford. There is growing opposition to wind farms off the south coast ( the campaigners want to cancel the wind farm site 12 km off the coast and move it to 22km offshore in 80m sea depth!!! ) Ask any engineer who worked on offshore oil how practical that will be. There are no floating wind farms operating in waters as stormy as the north Atlantic either.
In terms of fossil fuels it is utterly bizarre that the extension of the Corrib gas field cannot continue and the refusal to licence the Barryroe prospect off the south coast is madness. Neither of these projects would cost the state but would enhance out energy resilience immensely. The views of Irish Academy of Engineering are wilfully ignored.
I could go on but this is an aspect of the economy wit ignore at our peril !!!
I totally agree. Attitude to alternative energy is nuts. I cannot show my face in Clonea following my intervention!