Ireland raises forecast for pre-budget surplus

Ireland raises forecast for pre-budget surplus

DUBLIN (Reuters) – Ireland on Saturday nearly doubled its budget surplus forecast for 2022 to 0.9 percent of gross domestic product thanks to a boom in corporate tax revenue, giving it additional resources to help consumers cope with inflationary pressures.

Forecasts were issued ahead of the annual budget to be published next Tuesday, and the figures do not include any measures announced on that day.

The finance ministry said in a statement that Ireland’s general government balance is expected to come in at 4.4 billion euros ($4.3 billion), or 0.9% of gross domestic product, up from a July forecast of 0.5%.

Finance Minister Paschal Donohue said some of the more than 4 billion euros in surplus would be used to fund “a broad package of one-off measures…to support citizens and businesses in facing the real challenges they face due to high prices”.

He did not say exactly how much would be spent on these measures.

Without the “windfall” component of corporate tax revenue – which it puts at around 9 billion euros out of a total forecast of 21.05 billion euros – Ireland could face a deficit of 0.9% in 2022, the department said.

Corporate revenue, created mostly from large multinationals attracted to Ireland in part because of the low corporate tax rate, has risen in recent years and now makes up nearly a quarter of all tax revenue. But the government has repeatedly warned that it is volatile and unreliable to fund ongoing spending.

The ministry expected the surplus next year to be 11.8 billion euros, or 2.2% of GDP, if no new budget measures are taken thanks to an expected record corporate tax registration of 22.7 billion euros.

(1 dollar = 1.0320 euros)

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