Pressure for a fresh spending hike will now grow on the coalition government as the nation continues to struggle with the cost-of-living crisis.
Soaring corporation tax receipts will see the coalition government enjoy a budgetary surplus of up to €16 million next year.
The figures were released by government on Wednesday in their latest round of economic forecasts, with healthy surpluses now projected for the coming years.
With the next general election scheduled for March of 2025, the news comes as a welcome boost to a coalition who have seen their popularity dip to record lows, with Fine Gael (15%), Fianna Fáil (21%) and the Green Party (6%) all lagging far behind a surging Sinn Féin (37%).
The coalition government have seen their approval ratings slashed in recent months. (Credit: Rolling News)These encouraging financial figures stem from the Stability Programme Update, which is a document required under EU law, and shows that an exchequer surplus of over €12 billion can be expected next year.
Although, this sum can be increased even further when allowing for other factors to be included in estimates, such as the expected surplus in the social insurance fund, seeing the possible surplus total €16 billion in 2024.
In an effort to combat the cost-of-living crisis, the coalition last year offered up a ‘giveaway’ budget to the public, which saw a total package of €11 billion delivered.
With these most recent projections, it is now highly likely that government will seek to regain lost ground in the polls, and allow Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe repeat those ‘giveaway’ measures.
Ministers Paschal Donohoe and Michael McGrath refused to be drawn on the possibility of a ‘giveaway’ budget. (Credit: Rolling News)Despite this welcomed possibility for government, both Ministers were resistant to entertain the idea of big budget giveaways at the announcement of the results, instead airing on the side of caution.
The pair put their shared circumspection down to the unreliable nature of much of the corporation tax receipts and also the danger of building recurring spending commitments on the back of revenues that may be temporary.
Minister for Finance Michael McGrath stated at the release that “Half of the corporation tax receipts are windfall in nature and we can’t rely on these”.
Department of Finance officials have also stated that up to 50% of the estimated €24 billion worth of receipts from corporation tax could possibly disappear in future years.
The news of predicted budgetary surpluses will be welcomed by trade unions such as INTO, who are set to enter pay negotiations with the government. (Credit: Rolling News)The Department’s chief economist, John McCarthy, added that there were a slew of external factors which could hamper the promising economic forecast presented on Tuesday.
These factors include the unpredictable nature of global inflation rates, the ongoing conflict in Ukraine and the possibility of financial turmoil off the back of a number of worrying banking collapses in recent months.
Ahead of this autumn’s budget, the government is set to hold discussions with business groups, trade unions and other stakeholders to glean greater input on the state of the nation’s economy.
The news of predicted budgetary surpluses will also be welcomed by public sector trade unions such as the Irish National Teachers Organisation (INTO), who are set to enter pay talks with the government in the coming months.
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