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Exchequer deficit climbed to €9.5bn by end of August

The public finances recorded a deficit of €9.5bn at the end of August according to the latest Exchequer Returns. 

This compares to a deficit of €625m recorded at the same point last year.

The €8.8bn deterioration is largely due to increases in government spending. 

The increase in spending is concentrated in the departments of Health and Employment Affairs and Social Protection.

Compared to last year, there has been an increase in overall government spending of 28% or €9.46bn. 

But tax revenues continue to come in better than expected. 

Tax revenue in August was only down marginally by €11m or 0.4% compared to August of last year.

Cumulatively in the year to the end of August, the total amount of tax collected was 2.3% or €802m down compared to the same period in 2019. 

This is a result of a bigger than expected increase in corporation tax recorded earlier in the summer and a strong tax take before the pandemic struck.

In a statement, the Department of Finance also notes that ‘declines observed in most tax heads’ are ‘less severe than anticipated.’ 

Income tax has also continued to hold up better than expected and came in just €194m or 1.4% below last year for the period up to the end of August.

But VAT receipts are still down 21.3% compared to the same period last year. 

The public finances were also helped by a €2bn euro payment from NAMA to the Exchequer. 

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