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Government Exchequer Surplus Faces Sharp Decline Despite Surge in Tax Revenue

Dublin: Despite substantial revenue growth, the government faces financial strain as the Treasury surplus plummets by €1.2 billion. Increased public expenditure and a €4 billion transfer to NRF in February 2023 contribute to deteriorating finances.

Recent figures from the Department of Finance unveil a concerning financial scenario for the Irish government, with a fiscal surplus of €1.2 billion less than the previous year. The financial strain becomes more apparent considering there was a surplus of euros.

A primary factor contributing to this downturn is the substantial surge in government public expenditure. Additionally, the transfer of €4 billion to the National Reserve Fund (NRF) in February 2023 is cited as another contributing factor. The Finance Department attributes the decline in income to the loan repayment to the Social Insurance Fund in 2023 and a decrease in the sale of bank shares.

Despite a noteworthy increase in tax revenue, including income tax, VAT, and corporation tax, totaling €88.1 billion in 2023—an impressive €5 billion (6%) rise from the previous year—the government grapples with financial challenges.

Income tax, the largest revenue source, contributed €32.9 billion to the exchequer, marking a substantial annual increase of €2.2 billion in 2023 compared to 2022. Corporate tax, the second major revenue stream, experienced a 20% increase in December, with €1.8 billion received. The annual corporate tax revenue also grew by 5.3% in 2022, reaching €23.8 billion.

VAT revenue saw an uptick, reaching €20.3 billion in 2023—an additional €1.7 billion (9.4%). Capital acquisition tax revenue increased by €28 million. However, some areas experienced declines, with stamp duty revenue falling by €64 million, customs tax by €54 million, and capital gains tax by €0.2 billion.

The intricate financial landscape poses challenges for the Irish government despite the positive trajectory in tax revenues.

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