Government predicts €8.3bn in additional spending and tax measures for Budget 2025

Finance Minister Jack Chambers. Picture: Sasko Lazarov/RollingNews.ie

The Government will have an €8.3bn budget pot to dip into in October, it has confirmed.

The summer economic statement, published on Tuesday afternoon, shows that pot comprises additional public spending amounting to €6.9bn and taxation measures amounting to €1.4bn. That tax package is likely to be aimed at middle-income workers.

The Government will once again break its own spending rule by adjusting the expenditure strategy for 2025 and increasing total expenditure by 6.9%, which it says is to accommodate higher capital spending and "to provide additional public services against the backdrop of a larger-than-assumed population".

The Government is also planning to provide an additional €1.5bn in funding for the health service for this year to "account for the need for better quality healthcare, the complexity of providing health services, and the legacy impact of a post-pandemic and heightened inflationary environment".

The budget pot comes off the back of surging tax receipts.

Figures published last week by the Department of Finance show that during the first six months of the year, the Government generated a gross revenue of €54.7bn which is up by €3.5bn compared to last year. Of this, tax receipts accounted for €44.7bn, an increase of over 9% compared to last year.

The largest contributors are income tax at €16.7bn, which was up 7.5% compared to 2023, and corporation tax at €12.2bn which was up 15.4%. Vat receipts totalled nearly €11bn while excise receipts came to €2.9bn.

In June alone, €9.6bn in tax was taken in, of which €5.9bn was corporation tax, an increase of €1.6bn compared to the same month last year.

What is the summer economic statement?

The summer economic statement is designed to "form the basis for political discussions on the budgetary process and increase transparency in the Government’s approach to planning for the provision of key public services. The summer economic statement outlines the broad parameters that will underpin discussions of economic and fiscal policy over the medium term."

It effectively removes any surprise for the general public on the size of the Budget spending package and lays out how much will be spent the following October.

It was announced earlier this month that Budget 2025 will be delivered on Tuesday, October 1 — one week earlier than usual.