The Government does not now expect this year's budget deficit to run to €30bn. At a press conference this afternoon, the Minister for Finance Paschal Donohoe said part of the reason for this is the better than forecast income tax returns.
It is now understood this year’s deficit could be towards the lower end of the €24-€30bn range indicated in April.
The Government continued to collect more tax than it had expected early in the coronavirus pandemic in September, beating forecasts for the fifth month in a row to keep the year-on-year decline in the overall tax take to 3% so far this year.
The Department of Finance had forecast in April that State revenues would fall by 16% this year due to the pandemic disruption.
But a strong pre-crisis start to the year, better than expected income tax take since and a surge in corporate tax receipts meant revenues were little changed in the first six months.
An unprecedented level of stimulus to soften the economic hit pushed Government spending up 24.9% year-on-year in the first nine months and the Exchequer deficit to €9.4 billion, today's figures show.
This compares with a surplus of €38m the same time last year.
Reflecting reduced personal consumer spending, VAT receipts are down nearly 19%, or over €900m, in the third quarter.
Although down 13% on an annual basis, today's figures show that excise duties have recovered well in the third quarter, up nearly 9% on last year, with travel restrictions across the summer months likely contributing to the increase.
The Minister for Finance said today's Exchequer figures provide a timely snapshot of the public finances as the Government prepares for Budget 2021.
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"They show that although receipts are better than previously expected, much of the over-performance relates to corporation taxes - a revenue stream we cannot rely on over the medium-term," Paschal Donohoe said.
"Today's figures also show that the Government has directed an unprecedented amount of resources at fighting the pandemic.
"We have invested in our health service, protected incomes and supported business throughout this crisis.
"Budget 2021 will continue to use appropriate policies to direct resources at those who need it most."
Minister for Public Expenditure, Michael McGrath, said preparing for Budget 2021 will be challenging in the era of Covid and Brexit.
"Given the two assumptions that we've had to make, that Covid will be prevalent through all of, or certainly part of next year, and the backdrop or the prospect of a no trade deal Brexit, we have to prepare our expenditure framework in that context which is really challenging."
