Budget 2018: Where does all your tax money go?
Servicing the national debt still accounts for 16% of spending - more than the spend on education, housing or justice
As our population continues to age, the cost of delivering the state pension has also risen, and we now allocate about 10 per cent of total government spending to this payment.
Next Tuesday’s Budget may determine just how much we’re going to have to contribute from our pay cheques to the Government’s coffers in 2018; but just how is the Government going to spend the money it gets to keep?
Well, you might be surprised to learn just how much we’re still spending on our debt - some €10.6bn a year - and how little on areas such as housing (€1.2bn).
Just like in any household budget, the less you spend the more you get to keep - and the converse is also true. So if Government spending rises, so too must the tax burden to cover it. And as a very helpful Government website clearly shows, public spending has dipped this year, thanks in part to a jobs recovery and lower unemployment benefit and cheaper repayments on government debt.
But you might still be surprised at just where your money goes.
Our debt burden is still enormous
Back in 2007, it cost us just €6.3 billion a year to service our national debt and make various European contributions. Thanks to the subsequent bail-out of the banks, this soared to more than €18 billion by 2011, but has been on a downward trend since. However, it is still very substantial at €10.6 billion for 2017, accounting for 16 per cent of all government spending this year alone
Social protection is the biggest cost
It’s set to account for almost a third of government spending in 2017, as paying for pensions, unemployment benefits and other supports and payments remains the biggest expense for government.
The social protection budget is also up quite substantially on boom time Ireland, by 28 per cent on 2007, mainly due to an increase in state pension payments and illness, disability and carers payments.
The state pension is a huge burden
It cost us just €5 billion back in 2007 to pay the state pension to all those of eligible age; fast forward a decade however, and the bill has rocketed by 46 per cent to more than €7 billion - even though the state pension age has since risen to 66. Given the outlook for demographics, with the number of over-65s in Ireland projected to increase from 570,000 to 855,000 in the coming decade, this bill is only going in one direction. Which might make you wonder about the Government’s plan to increase this universal payment further in next week’s budget.
Spending on housing has shrunk
Back in 2007, the Government allocated some €3 billion to housing, planning and local government. While this plummeted to less than €1 billionby 2014, it is once again on the rise, with an allocation of €1.8 billion in 2017. Some €1.2 billion of this is going directly towards housing.
And the weather costs us €19m
What would we have to talk about if we didn’t have the weather? And how would we know what the weather might be like if it wasn’t for Met Eireann?
Funding Met Eireann, the Irish National Meteorological Service which employs about 30 people, will cost the Exchequer €19 million this year