The Government will hand voters billions of euros in tax cuts and spending increases and outline plans to use a whopping Apple tax windfall in a bumper pre-election budget.
Ireland now has one of Europe's healthiest sets of public finances, mainly thanks to a surge in corporate tax revenues paid by a handful of large US multinationals.
Officials are projecting a massive €25 billion surplus this year and €12 billion in 2025, which comes on the back of €8 billion surpluses in the previous two years.
That is in stark contrast to the State's economic situation in the wake of the financial crash, when governments posted deficits running into the tens of billions over several years.
The taxes that the Government receives, including social contributions, are now well in excess of €100 billion and have doubled compared with 10 years ago.
According to the latest estimates of tax receipts, the Exchequer is expected to take in €105 billion this year, not including PRSI contributions or local property taxes.
Approximately €8 billion of the €14.1 billion Apple taxes will be received by the Exchequer in 2024, with the remainder due in 2025.
The back taxes are due after a European Court of Justice judgment last month restored a 2016 European Commission ruling that found the State gave undue tax benefits to Apple, which would be illegal under EU rules.
The final judgment in the long-running case ordered the Government to recover billions in back taxes from Apple, which had been put in an escrow account pending the outcome of the case.
Even before the addition of Apple back taxes, corporation tax returns are expected to be just under €30 billion this year.
Corporate tax receipts are 28 per cent ahead of last year, which is “far in excess” of previous Department of Finance projections.
So how does the Government spend the tax money?
In the last budget, social protection spending was by far the biggest outgoing for the Government, accounting for almost a quarter of all its expenditure.
This includes the cost of benefits paid to pensioners as well those for working-age people.
About a fifth of Government spending goes on health.
Health spending rose significantly in response to the Covid pandemic and has been maintained in recent budgets because of the growing cost of looking after Ireland's ageing population.
The next biggest spending items are payments to the EU and the cost of debt interest – the amount the Government has to pay for the money it has borrowed.
Government spending is set to rise again in Budget 2025 ahead of a general election due by March.
But after a series of controversies and spending failures across the public service, including a bike shelter that cost more than €350,000, opposition politicians will be keeping a close eye on value for money.
