Why aren’t the Government spending the billions they now have on hand
For anyone who hasn’t heard the good news, the Government currently has a bit of money lying around. In 2022, tax revenue rose by 22% amounting to an annual increase of about €14.7 billion. Where did the money come from? Mostly greater corporation and income tax receipts. Corporation tax receipts increased from €1.3 billion to €3.2 billion and there was also an increase in taxed income on higher earning households.
In addition to more money coming in, there was also less money going out. Last year saw a significant reduction in pandemic-related payments which had been taking up a large amount of Government expenditure in previous years.
Overall, this has left Minister for Finance Michael McGrath and his colleagues with quite a bit of money in the kitty. The below graph shows the gross government savings in quarter 4 of 2022, which came in at just under €8 billion. The massive surplus in savings was enough to prompt UCC economist Seamus Coffey to paraphrase one of our former Taoiseachs and note that we are living way within our means.
The large amount of funds saved up is surely welcome news for Irish society as we have a few socio-economic issues which could do with fixing. For example, Leo Varadkar has stated that we are still 250,000 houses short of solving the housing crisis. Additionally, we are also suffering from a major problem with overcrowding in our healthcare service.
This begs the question how have the Government managed to rack up such a large amount of savings when we are still in dire need of houses and hospital beds? And if we have the money lying around, why are we not just be spending it and putting an end to our housing and healthcare problems?