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Exchequer returns cap transformative week for new finance minister Jack Chambers

Government is expecting a surplus of €8.6 billion this year

Paschal Donohoe, Minister for Public Expenditure, and Jack Chambers, Minister for Finance, at the announcement of the exchequer returns on Wednesday in Dublin. Photograph: Dara Mac Dónaill

Eoin Burke-Kennedy's face
Eoin Burke-Kennedy
Wed Jul 3 2024 - 19:45

Newly appointed Minister for Finance Jack Chambers has had something of a transformative week.

At the start of last week, he was one of the State’s three super junior ministers, able to attend Cabinet meetings but not as the head of a respective department.

Fast forward a week and he now finds himself as the State’s youngest finance minister since Michael Collins, in charge of the second most important political portfolio in the land, and at a time of unprecedented budgetary resources courtesy of another spike in corporation tax. Did I mention he is also the new deputy leader of Fianna Fáil?

It’s hard to imagine a more turbocharged ascent.

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Announcing the latest half-year exchequer returns on Wednesday, which pointed to another record tax take for the Government, Chambers made a number of pro forma comments about the figures reflecting the underlying health of the economy while cautioning about the potential volatility of corporation tax, essentially following the playbook of his predecessors.

Having that level of financial largesse – the Government is expecting a surplus of €8.6 billion this year and cumulative surpluses of €38 billion over the next four years – going into a budget in a country plagued by a dysfunctional health service and an acute housing crisis and on the eve of election is not necessarily an easy path for a new minister.

[ Surging corporation tax boosts State finances ahead of pre-election budget ]

In more straitened times, finance ministers could justifiably deflect the clamour for more resources from various departments and uneasy backbenchers on the grounds there was simply no money or that their hands were tied by the troika.

It’s not so easy when the exchequer is awash with tax receipts, the economy is growing and we’re at full employment.

And then there is the Central Bank and the Economic and Social Research Institute (ESRI) warning that the economy is rapidly advancing towards a point of overheating, which a big budgetary spend could tip us headlong into.

Asked how he plans to navigate these various pressure points, Chambers was adamant Ministers would have to “prioritise” and that the budget would be about embedding the public services “that we have advanced over the last four years”.

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The Government’s two new savings funds would help address the potential volatility around corporation tax and the overheating risk, he said. Either way, he has a difficult task on his hands.

June is typically the second largest month of the year for corporation tax behind November. The latest figures showed the Government collected €5.9 billion in June, up by €1.6 billion or 38 per cent on the same month last year.

The surge in receipts most likely reflects the tax paid by big tech players such as Google, Meta, Intel and Microsoft, which are due to make a 50 per cent payment in June, reflecting their December financial year ends.

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