Over €8 billion in budgetary surplus likely to be forecast for State

The Government is likely to project a large surplus for this year, with some sources suggesting it could be in excess of €8 billion.

The Stability Programme Update, a key economic document required under EU rules, is due to be briefed to Ministers at Tuesday’s Cabinet meeting, after which it will be published by Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe.

It is expected to predict a healthy budgetary surplus for this year based on an increase in revenues from corporation tax, income tax and VAT.

The two Ministers will hold a joint press conference following the Cabinet meeting, at which they will outline the Government’s macroeconomic forecasts for the year.

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However, despite some speculation, it is understood there will be no new reserve fund announced to set aside windfall corporation tax revenues, though such a move could be on the cards in the coming months. The Government has already set aside €6 billion in a rainy day fund.

Strong corporation tax revenues are continuing to flow into the exchequer. Already in the first three months of the year, there has been a 70 per cent increase in these figures when compared to the first quarter of last year.

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The receipts under this heading were some €3.2 billion between January and March, up from €1.9 billion in the same three months last year. There were also increases in revenue from VAT and from income tax, amounting to a further €1.5 billion. In all, first-quarter tax receipts were up 14.6 per cent year on year.

Mr McGrath has said he expects corporation tax receipts this year will exceed 2022’s record €22.6 billion. He described the continued high take as “truly exceptional”.

The report is expected to state that the economic impact of the conflict of Ukraine remains a factor but it will also point to a steadying of energy and commodity prices and a slowdown in terms of inflation.

Minister for Transport Eamon Ryan will also, at Cabinet, bring a memo for information around plans to begin developing a new “national demand management strategy” which will be aimed at reducing congestion in towns and cities, improving air quality, and providing more space for public transport, walking and cycling.

While it is expected that any such strategy will eventually outline plans for a reduction in private car usage, a source said the memo on Tuesday will be firstly aimed at kicking the process of consultation off.

The plan is a key part of the Government’s Climate Action Plan 2023. It is understood that it will involve widespread public consultation. Ministers will be told that this consultation will highlight the improvements taking place in public transport and active travel and the benefits of freeing up roads and public spaces for people.

Mr Ryan is expected to tell Cabinet that any such demand management measures will be most effective when alternative, public transport and active travel options are readily available, both in urban and rural areas.

Meanwhile, Minister for Children Roderic O’Gorman will bring plans to Cabinet to enhance child-protection measures in childcare.

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The Tusla “Early Years Inspectorate” is to be given enhanced enforcement powers. There are also proposals for improved information sharing with parents, as well as the introduction of a “fit person” regulation to empower Tusla to assess the suitability of a person applying to be a registered provider.

Mr O’Gorman will make the changes in the general scheme of the Child Care (Amendment) Bill 2023, which he is to seek Cabinet approval for. The legislation seeks to strengthen the Child Care Act 1991, which governs child protection and children taken into care.

Other proposed changes include a new “guiding principles” section which will outline how the best interests of the child should be the paramount principle in childcare. There will be a duty on Government agencies and bodies to co-operate with Tusla in relation to child welfare and protection.