Multi-billion euro package of one-off budget measures likely amid record €47.8bn tax receipts

Finance Minister Michael McGrath said that, overall, tax revenue now stands more than €4bn ahead of last year. Picture: Alan Hamilton

The Government is examining a multi-billion euro package of one-off measures for families and businesses in the upcoming budget as the State continues to take in record tax revenue.

The latest Exchequer figures show that tax receipts to the end of July were €47.8bn, up by €4.3bn, or 10% on last year, driven by strong income tax, VAT, and corporation tax receipts.

Senior Government sources say there is now significant scope to provide once-off welfare payments, energy rebates, and financial supports for businesses under a cost-of-living package.

Among the options now being explored by the Government as part of a package of one-off measures to be announced on October's budget day are:

• A number of energy credits similar to the series of €200 payments made to all households after Budget 2023. However, targeted energy payments are also under consideration;
• Further lump sum payments for those in receipt of the fuel allowance;
• A double child welfare payment or a repeat of the extra €100 for each child that was paid along with child benefit in June;
• One-off supports for businesses. This could be through a reworked version of the TBESS scheme, which had been criticised by some for being too cumbersome.

Sources have said that specific options will not be looked at in detail until September. Exchequer returns for the third quarter of the year, as well as the rate of inflation in October, will determine the level of once-off payments as well as the total package for such measures.

The Government is conscious of a number of issues including inflation and the fact that using the additional finances to fund ongoing measures will have to be funded in years to come when corporation taxes may be in decline.

Reacting to the returns, one senior minister said there will be "leeway" for one-off measures later in the year due to the surplus with the focus being put on assisting families with the cost of living and helping with energy bills, which will remain elevated this winter although not at the same level as last year.

I would think a mix of universal and targeted measures would work best," the minister said.

But another Coalition source warned: "If Government turns on the tap too vigorously, undoubtedly you are going to risk inflation running for longer."

Income tax receipts came to €18.2bn in the first seven months of the year, up by almost 9% on the same period last year.

VAT receipts stood at €13.2bn at the end of July, up by €1.4bn, while corporation tax receipts jumped by €1.9bn on the same period last year.

Welcoming the exchequer returns, Finance Minister Michael McGrath said that, overall, tax revenue now stands more than €4bn ahead of last year.

He warned that a "considerable portion" of this increase is driven by potentially unsustainable corporation tax receipts, but said the Government is taking steps to address this exposure with €6bn in windfall receipts transferred to the National Reserve Fund and work under way on proposals for a longer-term investment fund.

Last year's budget included €4.1bn in once-off supports to help struggling households and businesses.

While a significant pot will again be allocated in October, it is unlikely that the package will be of the same magnitude as last year.

Government sources last night stressed that last year's cost-of-living package was agreed at time when inflation was running at around 8% and energy prices were also extremely high.

Gerard Brady, chief economist at business group Ibec said: “The finance minister is going to have an exceptional level of resources for this year at least.

“Our view is that we are reaching in the coming year the peak of the buoyant tax receipts."