The latest exchequer tax returns published this afternoon will go a long way to reassure the new coalition it has the money to extend the Covid-19 unemployment supports and fund its promised stimulus packages without blasting through an indicative €30bn upper ceiling for the budget deficit this year.
Corporation tax revenues in June are set to repeat their outsized performance of May and help offset some of the revenue hits suffered by other major tax sources.
The focus remains on corporation revenues because June is not only a major month for corporations to pay the tax but is also a key indicator of the amount that multinationals will pay the exchequer later this year.
Vat revenues suffered the largest slump after the March lockdowns kept shoppers at home and closed most retail businesses but they will not be in the spotlight this time because June is a non-Vat payment month.
In April, the Government indicated the Covid-19-driven deficit this year would balloon to between €24bn and €30bn, as its finances buckled under the huge health and welfare spending and the loss of tax revenues.
Additional spending promises made by the new coalition since coming power last weekend suggest the 2020 deficit will still likely be closer to €30bn than the lower estimate of €24bn, despite the better-than-expected corporation tax receipts.
It appears a key demand of many business groups for ultra-cheap loans with a 100%-guarantee from the Irish State will not be delivered in this summer’s stimulus package, as Finance Minister Paschal Donohoe yesterday signalled caution.
“I remain strongly of the view that those who are lending out that credit and making money available should have a stake in ensuring that this is a successful loan that is right for the person or company taking it and that they have an ability to recover that loan in the future,” Minister Donohoe said.