Minister Donohoe publishes the Government’s Summer Economic Statement
- Increased capital expenditure will help us better meet the needs of a growing economy and society
- Focus must be on the totality of Govt’s €60 billion in expenditure to ensure maximum value for the taxpayer
The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., today (Wednesday) published the Government’s Summer Economic Statement (SES). The Statement is an integral part of the reformed budgetary process that facilitates a discussion of the options in advance of the annual Budget in October.
The Summer Economic Statement sets out the key elements of the Government’s economic strategy.
This revolves around six key pillars:
• Ensuring sound and sustainable public finances;
• Managing public expenditure to ensure maximum return on taxpayers’ resources;
• Targeted increases in public investment;
• Reforming the tax system to ensure it is growth-friendly;
• Ensuring inclusive growth;
• Facilitating access to finance, especially for SMEs.
The Statement, which outlines the broad parameters of the Government’s economic strategy, also provides an updated assessment of the fiscal space for next year – this is estimated at €1.2 billion, consistent with ‘balancing the books’ next year. The full-year costs of measures introduced for this year mean that the current scope for new additional measures is around €500 million for next year.
Minister Donohoe highlighted the importance of looking at the totality of Government spending rather than the incremental changes each year and outlined that the Government would prioritise limited resources in those areas where needs are greatest.
The SES sets out that the Government will:
• Balance the books next year;
• Implement sensible budgetary policies designed to ensure stability and continued improvements in living standards;
• Establish a rainy day fund from 2019 onwards, to be capitalised with annual contributions of €500 million from the Exchequer;
• Increase capital investment by an additional €500 million in each of the years 2019-2021 to further develop our economic and social infrastructure so that we can better meet the needs of our people as our economy, and society, grows. This increase, which will enhance the competitiveness and resilience of the Irish economy, will result in gross voted capital of nearly €7.8 billion in 2021. This will be 85% higher than the outturn of €4.2 billion in 2016.
• Focus on the totality of expenditure – which amounts to around €60 billion – in order to ensure maximum value-for-money.
• Continue to reduce the debt to GDP ratio until the 60% legal threshold is achieved. Thereafter work will begin on reducing the ratio to 55% of GPD and, once major capital projects have been completed, the reduced rate of 45% will be targeted.
Minister Donohoe said: ‘The economy is growing at a healthy pace and generating jobs-rich growth. Indeed, we are now approaching a situation in which jobs are available for all those who want them. Now is the time to build on the gains of recent years, to improve the resilience of the economy and to address the capacity constraints that are emerging’.
“We live in an increasingly uncertain world and must plan accordingly. To this end, the Government will maintain a rainy day fund while at the same time increasing public investment. We will continue to reduce public debt in order to build up fiscal buffers. It is also important to make the taxation system more growth-friendly and the Government will continue to work in this area.”
Deborah Sweeney, Press Adviser to Minister Donohoe: 086 858 6878
Ben Sweeney, Press Officer: 085 806 9313
- Today’s Exchequer Returns show that to end-April 2017 the Exchequer recorded a deficit of €2,537 million, compared to a deficit of €1,055 million in the same period last year (the difference year-on-year of €1,482 million is primarily due to the Exchequer benefiting from an early receipt of Central Bank surplus income of €1,795 million in April 2016 a similar distribution from the Central Bank is expected in May). When we exclude this transaction from the arithmetic the Exchequer position is showing a year-on-year improvement of €313 million.
- Total Tax Receipts on a cumulative basis to end-April 2017 increased by €68 million or 0.5% compared to the same period in 2016 but are slightly down (2.4%) on profile for 2017.
- Three of the big four taxes (see notes below), i.e. income tax, corporation tax and excise duties are down on profile. The Department did not change its 2017 Exchequer tax forecast in the SPU published yesterday and the overall performance in the year-to-date underpins this decision.
- Gross voted expenditure on public services and infrastructure is down 1.6% on profile but up 3.0% year-on-year.
Further information on Taxes:
- Income Tax receipts of €1,762 million were collected in April, which was 1.0% or €19m below monthly target. This represents a 0.8% or €14m increase compared to April 2016. The underperformance relates to number of the minor income tax components such as DIRT and Dividend Withholding Tax receipts. USC is slightly behind target, with the bulk of the underperformance relating to the January / February period. The Revenue Commissioners and the Department of Finance are continuing to examine why this might be the case.
- VAT receipts are up €602m or 14.5% in annual terms. The strong receipts are in line with positive retail sales, with overall core retail sales up 5.9% in Q1 of 2017.
- April is not a key month in terms of Corporation Tax and receipts of €67 million were collected in April, closing the month €47 million below profile. It is important to point out that corporation tax receipts can be “lumpy” and are highly concentrated around the key payments months of May, June and November, which account for over 60 per cent of the total receipts.
- Excise duties finished the month €26m or 5.4% below target. In cumulative terms, excise duties of €1,740 million at end-April, were down €117 million (6.3%) against target. The under-performances is attributable across a broad range of excise components.
For further information contact:
David Byrne Press Officer email@example.com 086 026 7978
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