Resilient taxes can’t match ballooning Government spending as €9.452bn defecit recorded
The amount of tax being collected by the State has continued to defy the scale of the pandemic economic crash but nowhere near enough to fund ballooning spending, new Exchequer data shows.
The State recorded a deficit of €9.452bn for the nine months to the end of August as government spending dramatically outstrips income.
Tax revenues for the month of August was €3.095bn, down just €11m compared to August 2019. Declines across most tax heads were compensated by increases in VAT and Corporation Tax receipts.
For the year so far, tax receipts of €34.248bn are down 2.3pc despite the hit to the economy from the Covid crisis. Income taxes have generally held up, helped by the fact that so far the higher earners who pay the bulk of income tax have been less likely to lose their jobs than lower paid and younger workers in sectors like hospitality and retail.
Combined with strong corporation tax receipts that has helped compensate for declines across most other revenue streams.
The bigger impact of the pandemic is on spending, which has ballooned dramatically since March, funded by increased government borrowing.
Total net voted expenditure to the of end of July was €43.2bn, up 28pc on last year.
The rise is driven by the State’s response to the Covid-19 pandemic, including a sharp rise in health spending and spending by the Department of Employment Affairs and Social Protection on wage supports and job subsidies.
One bright spot in the numbers was a payment of €2bn from NAMA to the Exchequer.
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