THE DEFICIT OF public finances was €7.4 billion in July compared to a surplus of €896m recorded in July of last year, new figures from the Department of Finance show. 

The deterioration of €8.3 billion in Ireland’s Exchequer was largely driven by increases in expenditure in response to Covid-19. 

Overall tax revenues were down 18.6% – or €983 million – compared to July last year.

Department of Finance Department of Finance

Cumulative tax receipts, however, are down 2.5% compared to July last year due to a strong performance in January and February and a large increase in Corporation Tax recorded in June. 

The decline in tax revenues was driven largely by a significant drop in VAT receipts compared to July last year - down 22.7% (€2.2 billion) in the year to date compared to the same period last year. 

Income tax receipts showed “continuing resilience” with €1.59 billion collected in July, down 8% compared to July last year, the Department said. 

Spending, meanwhile, is up 29.5% or €8.662 billion year-on-year, largely due to increased Departmental expenditure resulting from Covid-19. 

Commenting on today’s figures Minister for Finance Paschal Donohoe said: “Today’s Exchequer returns confirm that the Covid 19 pandemic continues to have a major impact on the country’s finances.

“The extraordinary increase in public expenditure is a result of the Government’s commitment to supporting our health service and the wider economy through this unprecedented period, as demonstrated with the recent announcement of the July stimulus plan to support businesses and get people back to work. 

“A deficit of this magnitude underlines the extent of the fiscal challenge we face in placing the public finances on a sustainable and credible trajectory as the economy recovers.”