Jack Chambers, the newly appointed Minister for Finance, cautioned fellow ministers to prioritise in order to remain within budget limits in the forthcoming financial plan announcement. After experiencing a global pandemic and a fluctuating inflationary environment, this prioritisation becomes necessity, according to Chambers. This warning followed the revelation of an all-time high in half-year exchequer returns, credited to a significant rise in corporate tax.
Recent data indicates that the government amassed €44.7 billion in tax within the first half of the year, marking a 9% or €3.8 billion increase compared to the previous year’s same period. This places them in a robust financial standing ahead of budget season. The standout performer in these figures was corporate tax, contributing close to €6 billion for just the month of June, standing 38% higher than June of the preceding year.
However, Chambers emphasised increasing expenditure pressures in multiple government departments. As per exchequer data, health sector spend already exceeds the originally projected figures by 11% or €1.1 billion in the current year. He conferred that these pressures significantly impact the spending structure for the year 2025. He then touched upon the upcoming budget plan, which is set to strengthen public services that have been developed over the past four years.
The total gross expenditure approved during the year’s first half reached €47.1 billion, rising by 12.4% or €5.2 billion over the analogous 2023 period. This equated to a 3.3% or €1.5 billion increment over the anticipated amount.
Chambers steps into the Finance Minister role during times of unparalleled fiscal resources, paired with warnings from multiple institutions, including the Central Bank and Economic and Social Research Institute (ESRI), about potential overheating of the Irish economy. As a measure to fight overheating, the government has launched two new investment schemes, the Future Ireland Fund and Infrastructure, Climate and Nature Fund, which will reallocate crucial monetary resources away from the economy to be used at a future date, which he stated, will help mitigate risks connected to unexpected tax revenues.
Mr Chambers conveyed that the government’s fiscal guidelines for the 2025 Budget will be disclosed in the yearly Summer Economic Statement next week. Concurrently, the Minister for Public Expenditure, Paschal Donohoe, raised concerns over mounting spending pressures. He reminded all departments at the end-June spending review of their need to adhere to their budgets, with a commitment to liaise with fellow government members for better expenditure management in the coming time. Notwithstanding, Mr Donohoe also observed an escalating trend in capital expenditure, with a rise of more than 50%, equating to €1.6 billion, in comparison to the same period last year. He added that this spending is aiding the intensification of investments in educational institutions, housing and transport structure.