The State recorded a budget surplus of approximately €5.2 billion in 2022, far in excess of the €1 billion projected just over three months ago, the Department of Finance confirmed on Wednesday.
The turnaround from a deficit of 3 per cent of gross national income in 2021 reflected a fall in Covid-19 related spending and strong tax revenue growth.
In 2022, tax revenue totalled €83.1 billion, showing a 22 per cent (€14.7 billion) increase on the previous year.
Approximately €30.7 billion was collected in income tax (up 15 per cent on 2021), while corporation tax receipts amounted to €22.6 billion (up 48 per cent) – making it the second-largest income stream for the first time ever.
However, the department warned: “A significant part of this revenue stream is expected to be once-off in nature,” and added the corporation tax figures for December were below expected.
In terms of expenditure, an extra €1.2 billion was spent on core services and investments, as well as cost-of-living measures in 2021, bringing the gross voted expenditure to €88.8 billion.
The easing of Covid restrictions saw a decrease in spending relating to pandemic supports, and was also reflected in an increase in VAT receipts of 20.5 per cent on 2021 figures, jumping to €18.6 billion.
The underlying general government balance, excluding the department’s assessment of transitory corporate tax receipts, was estimated to have been a deficit of approximately €5.25 billion.
Commenting on the figures, Minister for Finance Michael McGrath said 2021’s returns reflect “the strength of the post-pandemic recovery in demand and employment”.
Mr McGrath also cautioned expectations over corporate tax returns: “By far the most important factor behind the headline surplus is the strength of corporation tax revenue – receipts from this source have doubled since just before the pandemic.
“My department estimates that around half of these receipts are potentially at risk – if these receipts were excluded, we would instead be facing a significant deficit. That is why Government has acted to mitigate this vulnerability by transferring part of this windfall to the National Reserve Fund to rebuild our fiscal resources.”
He added that since the figures are retrospective, “they do not offer a guide as to the challenges that we will have to address going forward”.
“Keeping the public finances on a sustainable trajectory puts us in the best position to meet these future challenges. That is what this Government will continue to do.”