Ministers will have a massive €4.4bn surplus available in 2022 for one-off measures

Ministers will have a massive €4.415bn surplus available in 2022 for one-off measures including underpinning energy bills before even having to consider next year’s spending commitments, new figures from the Department of Finance show.

he annual White Paper, published at midnight on the Friday before every budget, sets down the State’s spending and income for the current year and projects what that would translate to the following year on a so called ‘no budget basis’ meaning no tax changes or changes to spending policy.

Last night’s figures show the public finances are on course to end the year in drastically improved condition, throwing off a general government balance, or surplus, of €4.415bn – that’s the money expected to be left over when all of the State’s existing spending commitments have been met without borrowing any new money this year.

The surplus is projected to more than double in 2023 to a massive €11.78bn.

The shift in the public finances is profound.

As recently as April, Finance Minister Paschal Donohoe argued early indications of a strengthening budget position was a false dawn, predicting a deficit – an excess of spending over income – for 2022.

That ultra cautious position has been left dramatically behind by the true out-turn especially the surge in corporation taxes being paid here but other factors including more Vat being paid and a much smaller cost to support Ukrainian refugees relocating here than first anticipated.

The result puts a huge windfall in the hands of ministers to support households and businesses through the winter’s expected energy bills shock, without having to go to the markets while still leaving a balanced budget that was not expected at the start of the year.

Next year’s potential near €12bn surplus now makes the 2023 €6.7bn budget package of higher spending and reduced taxes ministers look relatively modest – although next year’s numbers reflect a huge €22.7bn of corporation tax that officials now expect to be paid.

That’s almost five times more than the corporate tax collected as recently as 2014 and the scale of the increase has prompted major question marks over how sustainable or reliable those funds are.

To address that question officials who prepared the budget White Paper included alternative numbers based on a possible collapse of more than €9bn in the tax receipts.

Even stripping out this so called windfall level of tax the forecasts show a budget surplus in 2023.

The huge improvement in the public finances boosts the Government’s capacity to support the economy through the energy crisis caused by the war in Ukraine and will heap pressure from within and outside the Cabinet for a more generous budget next year, although more conservative voices will point to the need to keep a reserve amid uncertainty over the jobs market especially in the tech sector and the looming risks of recession.

Even within the existing framework its understood ministers are fighting through the budget lines including over the massive and sprawling Health spend.

On Friday key budget talks over the amount of healthcare spending next year are understood to have stalled amid a row between Fianna Fáil Ministers Michael McGrath and Stephen Donnelly and their officials.

Mr McGrath, the Public Expenditure Minister, has offered Mr Donnelly, the Health Minister, a total budget of just over €22bn including around €1.1bn in new spending.

But the Department of Health has said that the €1.1bn on the table will only cover existing spending commitments with no money left for new measures.

Mr Donnelly wants to abolish hospital charges, reduce prescription fees, expand free GP care, free contraception and begin to provide publicly funded IVF.

“There will be new measures and a waiting list initiative, they just have to prioritise what they want to spend the extra money they are getting,” one source said.

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