Covid-19 leaves State finances €9.4bn in the red

State spent an extra €10.5bn compared to last year

Minister for Finance, Paschal Donohoe TD said corporation taxes cannot be relied upon over the medium-term. Picture: Gareth Chaney/Collins

The State has run up a €9.4bn deficit so far this year to combat the impact of Covid-19.

Latest exchequer figures show tax revenues in the third quarter were down 10 per cent, or €1.4bn on the same period last year and were down 3 per cent or €1.2bn year on year;

Reflecting the reduced personal consumer spending due to lockdowns and other restrictions, VAT receipts in the third quarter are down nearly 19 per cent, or more than €900m.

Despite the impact of the pandemic, corporation tax receipts continue to over-perform and are now €1.6bn higher than to end-September last year. 

Minister for Finance, Paschal Donohoe TD said the figures provide a timely snapshot of the public finances as they prepare for Budget 2021. 

"They show that although receipts are better than previously expected, much of the over-performance relates to corporation taxes — a revenue stream we cannot rely on over the medium-term," he said.

“Today’s figures also show that the Government has directed an unprecedented amount of resources at fighting the pandemic. We have invested in our health service, protected incomes and supported business throughout this crisis. Budget 2021 will continue to use appropriate policies to direct resources at those who need it most.”

The Minister for Public Expenditure and Reform, Michael McGrath TD said: "The expenditure increase of €10.5 billion compared to last year, highlights the significant measures implemented to address the challenges from Covid-19."

"Social Protection spend is now projected to be more than €30 billion this year. This response from Government reflects the scale of the impact that the pandemic has had on people’s jobs and income. As we look towards Budget 2021, our priorities are to ensure that our key public services continue to deliver the services needed by our citizens while also putting in place the resources to support workers and businesses to recover."