Eamon Quinn: Varadkar had enormous tax resources to fight three economic crises since 2017

 Separate storms of Brexit, covid, and cost-of-living crisis

A deserted Grafton Street in Dublin, during Ireland's first coronavirus lockdown. Picture: Niall Carson/PA Wire

Leo Varadkar, since securing the leadership of the governing Fine Gael party and his appointment as taoiseach, would at first sight appear to have been among the unluckiest leaders in Western Europe.

Since 2017, Mr Varadkar has battled the prospects of the hardest of hard Brexits that Tory extremists in Britain and a large slice of political unionism in the North had designed to nobble the economy across the island. 

His leadership, at one time or another over the next seven years, faced two further economic storms that were not of Ireland’s making.

The global pandemic buffeted the Irish economy, as it had for other rich European economies, and soon after, contributed to the worst cost-of-living crisis since the 1970s.

European economies faced the twin perils of global inflation as global manufacturing and the supply chains linking factories from China to Europe buckled under the strain. 

Then, almost overnight, cheap Russian gas that fuelled much of European industry all but evaporated, when president Vladimir Putin invaded Ukraine. Soaring energy bills since early 2022 have only now abated.  

An alternative reading of Ireland’s economy since 2017 is that Mr Varadkar has been the luckiest of leaders. That’s because, the Irish exchequer, as long tracked by the Irish Examiner, is among the wealthiest in Europe, tapping enormous amounts of tax revenues that other European governments can only dream of.

2017 a good year to become taoiseach

The exchequer tax returns, the most important of economic indicators, show that in retrospect 2017 was a good year for Mr Varadkar to become taoiseach.

Economic recovery had ben purring for a number of years, and with economic growth, tax revenues were flowing again. 

In 2017, the Government collected total tax receipts of €50.7bn, including a haul of €8.2bn that in large part was accounted for by the corporate taxes paid by US multinationals, the tech and pharma giants that had set up significant European bases in Ireland. 

Leo Varadkar, pictured with former British PM Boris Johnson, had to battle the hardest of hard Brexits. Picture: Liam McBurney/PA Wire

Almost as importantly, the big corporates had also established international accounting structures here.  

By 2019, on the eve of the pandemic, Government tax revenues had risen to more than €59bn, of which almost €11bn came from the corporate tax bills of the multinationals. 

The pandemic only slightly dented this flow of wealth. Famously, Ireland's exchequer took in over €83bn in receipts in 2022, of which over €22.5bn came from corporate taxes.

Last year, the treasure reached a new record of over €88bn, including almost €24bn from the corporates.  

All this wealth added up to significant resources for Mr Varadkar to fight the three economic crises — Brexit, covid, and the cost-of-living crisis. 

On the spending side, the Government had significant amounts of money to spend on health and housing, including on welcoming 100,000 refugees from Ukraine.   

The Government's health budget, covering both current and capital spending, at €14.3bn in 2017 rapidly ballooned to €20.3bn in 2020, the first year of the pandemic, and then to €23bn in the second emergency year. Last year's health spending settled at almost €22bn.  

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For housing, the Government's spending budget of €2bn in 2017 had increased to €6.5bn last year. 

What the figures show is that Mr Varadkar has been fortunate to have had the huge wealth of resources from the bounties of tax receipts. 

With the support of Europe, his handling of Boris Johnson's Brexit government was commendable, at a time when some business and political commentators in Dublin were calling for concessions to a quixotic British administration.  

The electorate will soon have its say on whether Mr Varadkar had best used the wealth of resources to repair dysfunctional housing and healthcare systems in the State.