The Government is expecting a record €25 billion surplus this year as a result of the Apple tax ruling, setting the scene for a giveaway budget in advance of a possible general election.
The Department of Finance is forecasting a general government surplus of about €25 billion for 2024, Minister for Finance Jack Chambers told reporters at a joint press conference with Minister for Public Expenditure Paschal Donohoe on Friday. This wasmore than double the projected surplus a year ago. The department is forecasting a €12 billion general surplus in 2025.
The State will take in about €8 billion of the Apple tax this year but for accounting purposes will book the entire €14 billion in 2024, Mr Chambers said. The general government surplus includes the fiscal performance of the exchequer as well as the social insurance fund, and the likes of the Irish Strategic Investment Fund and local authorities.
While the surplus will fall somewhat due to supplementary spending and other one-off payments, the scale of it dwarfs any previous forecasts. The windfall also underlines the outsize impact of the Apple ruling on the State’s finances.
Mr Chambers reiterated the Apple money would not be used to fund current spending, but instead to build capacity in the economy and improve Ireland’s “competitiveness”.
“We are now forecasting corporation tax receipts of just under €38 billion for 2024,” Mr Chambers said. “This is the equivalent of approximately 8 per cent of GNI* for 2024 and 3.75 per cent of GNI* for 2025,” he added.
GNI*, short for modified gross national income, is widely seen as a more useful measure of the Irish economy than traditional ones like gross domestic product (GDP). Irish GDP is skewed by the movement of billions of euro worth of intellectual property through Ireland by multinationals operating here.
Mr Chambers was speaking ahead of the publication of the budget White Paper, expected later today, which outlines the forecasts for the year ahead that the Government will base the budget off. The White Paper excludes the budget in its calculations.
Corporation tax is running “far in excess of what the projections were”, Mr Chambers said. “It’s important with additional windfalls around corporation tax that we’re very careful in our management of that, aside from the Apple static state aid case.”
“The other main tax receipts, in terms of income tax, VAT and excise, are all in line with wider projections,” he said. Overall tax revenue is expected to come in at €108 billion for the year.
The cost of living package that is expected to be announced on Tuesday is still being discussed, Mr Donohoe said.
“There does need to be a cost of living package to reflect the fact that prices have gone up by so much in the last few years, but the size of package also needs to reflect the fact that inflation is now at a lower level than in previous year,” Mr Donohoe said.
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