Dáil Éireann Debate, Thursday - 28 April 2022
24. Deputy Ged Nash asked the Minister for Finance if the recently announced temporary reduction in VAT, excise duty and lump-sum payments are to be paid from a surplus in the public finances or by adding to the public debt; and if he will make a statement on the matter. [21423/22]
Amharc ar fhreagraThe Stability Programme Update (SPU), published by my Department earlier this month, projects an exchequer deficit of almost €1.1 billion for this year. On a general government basis, a deficit of €2.0 billion is in prospect for this year, the equivalent of 0.8 per cent of modified national income.
Since Budget 2022 was presented in October last year, Government has intervened on three further occasions to address the cost of living, with the total cost of the measures announced between February and April estimated at approximately €1 billion. When the Budget 2022 income tax and social welfare package of almost €1.1 billion is included, Government has provided approximately €2.1 billion to address increases in the cost of living.
The SPU includes these costs in the projections for the budgetary deficit; to put it another way, the measures introduced have worsened the budgetary deficit by a broadly similar amount.
All else being equal, therefore, the measures introduced by Government will require additional borrowing and will add to the stock of public debt. For this year, the level of public debt is projected at €234 billion, or 96.5 per cent of modified national income.
Finally, it is also worth pointing out that sovereign borrowing costs are now rising, meaning the Government's capacity to finance large deficits is more constrained than it was during the pandemic.
