- Today’s Exchequer figures show that cumulative tax revenue to end-August is down by 2.3 per cent, or €802 million on the same period last year.
- Reflecting significantly reduced personal consumer spending in the spring, VAT receipts to end-August are now down by over € 2.1 billion, or 21 per cent on the same period in 2019.
- Similarly, excise receipts have fallen by 15 per cent, or €579 million to end-August.
- Tax revenues in the month were similar to August 2019, down by €11 million, or 0.4 per cent on last year.
- Total net voted expenditure to end-August was €43.2 billion, a 28 per cent or €9.5 billion increase on the same period in 2019.
- The rise in expenditure reflects increased departmental drawdown in response to the Covid-19 pandemic, particularly in the areas of health and social protection.
- An Exchequer deficit of nearly €9.5 billion was recorded to end-August 2020.
An Exchequer deficit of €9,452 million was recorded to end-August 2020. This compares with a deficit of €625 million in the same period last year. The €8,827 million year-on-year deterioration in the Exchequer balance is primarily driven by increases in voted current and capital expenditure. Cumulative tax receipts for the year are €34,248 billion, down by €802 million, or 2.3 per cent, on the same period last year. Receipts-to-date have benefitted from a strong performance in January and February as well as solid corporate tax receipts, which have compensated – to an extent – for sharp declines in other tax heads, notably VAT and excise receipts.
Cumulative income tax receipts to end-August are down, on a year-on-year basis, by 1.4 per cent, or €194 million. The highly progressive nature of the income tax system continues to provide some resilience to receipts, but this revenue stream nonetheless suffered a further year-on-year decline in August, falling by 5.7 per cent, or €106 million. Reflecting the fall in personal consumer spending in recent months, VAT is down €2.1 billion to end-August compared to the same period last year, while excise receipts are down €579 million. Corporation tax receipts in the month were up by €100 million on August last year, although August is not a significant month for corporation tax receipts.
Overall, the aggregate outturn to end-August continues the trend of recent months, reflecting a steep year-on-year decline in VAT and excise duties, but offset to some extent by strong corporation taxes and, to a lesser extent, some resilience in income tax receipts.
Total net voted expenditure to end-August was €43,200 million. In year-on-year terms, this was up €9,460 million, or 28 per cent on the same period in 2019. The rise in expenditure reflects increased departmental drawdown in response to the Covid-19 pandemic, particularly in relation to the Department of Health and the Department of Employment Affairs and Social Protection.
Commenting on the figures, the Minister for Finance, Paschal Donohoe T.D. said:
‘Today’s Exchequer returns confirm the scale of the cost of fighting this pandemic. The Exchequer deficit to end-August reflects the unprecedented increase in public expenditure as a result of the Government’s support for our health service and the wider economy through this crisis. Although there are some positive developments – most notably in income tax receipts – a considerable and unprecedented amount of uncertainty remains. A deficit of this magnitude underlines the extent of the challenge we face — once the economy recovers — in placing the public finances on a sustainable trajectory.’
Minister for Public Expenditure and Reform, Michael McGrath TD said:
‘The country’s finances have been under enormous pressure due to Covid-19. We have faced an extraordinary set of circumstances and have increased spending, particularly in the areas of Health, Social Protection and Business to protect public health and to support the incomes of those whose livelihoods have been devastated by this pandemic. The expenditure figures for August also reflect the drawdown of additional funding to support the reopening of schools. People have shown great resilience during this crisis and we will continue to do everything we can to help businesses and to keep people in work.’
ENDS