Rising tax revenue provides government with unprecedented pre-Budget war chest – The Irish Times
Rising tax revenues have bolstered the government’s fiscal position and provided it with an unprecedented war chest ahead of the budget later this month.
Monthly Treasury statements released Friday evening by the Ministry of Finance show a surplus of 6.3 billion euros at the end of August, a development likely to increase political pressure on the government to unveils a large package on the cost of living during the presentation of the budget. .
While ministers agreed to limit recurrent spending increases in the budget, there is now growing scope for one-off measures that have been repeatedly promised by government to address the cost crisis. life and which, according to some sources, will exceed – and possibly greatly exceed – 1 billion euros on budget day. These initiatives – which are expected to include other energy credits – are expected to be implemented soon after the September 27 budget.
But it’s also likely the finance department will push to divert some of the surplus to the state’s “rainy day fund,” which was plundered to help with the cost of the coronavirus pandemic. Covid-19.
The three coalition party leaders are due to meet next Tuesday, and sources say the government is likely to set out the direction of its cost-of-living plans after its meeting on Wednesday.
Tax receipts for the eight-month period amounted to 49.8 billion euros, 10.4 billion euros or 26% more than the same period last year. It was also the biggest tax grab for the first eight months of any year. This increase is due to the continued growth of corporate tax, income tax and VAT.
Latest Treasury figures show corporation tax generated €11.8bn for the eight-month period, more than €4.8bn ahead of the same period last year . The department said the performance was due to “significant increases in profitability in the multinational sector.” Corporate tax revenues are expected to reach a record €18 billion this year.
On a cumulative basis, income tax brought in 19.2 billion euros, 16% more than the same period last year, reflecting the strength of the labor market, now close to full employment .
Separately, The Irish Times has learned of proposals to hit tourists with a surcharge for every night they spend in the country.
The recommendation for an “accommodation tax” is contained in the Commission’s unpublished report on taxation and social protection, and is inspired by similar charges in other European capitals, including Paris, Berlin and Vienna.
The tax, if introduced, would undoubtedly result in a negative reaction from the hospitality industry. However, the commission’s report argues that under the ‘polluter pays’ principle, tourists should be hit with a tax for services they use while in the country but do not fund. .
Although no specific level is recommended for the tax, the report notes that in EU member states an average of €0.40 to €2.50 per night applies, which varies depending on the type accommodation provided.
Describing the logic of the charge, he states that “tourists and other visitors benefit in the short term from public goods and services, such as water and sewerage systems, utilities, waste treatment facilities, parks, security and public safety services, without having contributed to their funding”.
Meanwhile, Finance Ministry officials are eyeing windfall revenue from the Treasury as a source to help replenish the government’s rainy day fund. An additional payment of €500 million in 2022 and 2023 is already provided for by law – although payments in 2020 and 2021 have been suspended due to the pandemic. Another shortcoming would require a Dáil vote to circumvent the obligation to pay as has been done for two years.
Well-placed sources said there was ongoing pressure for an even higher figure than 500 million euros to be poured into the rainy day fund, given severe warnings from various economic advisers in the government regarding the concentration of corporation tax in a small number of corporate taxpayers.