Government banked an extra €2billion in VAT takings in May on the back of the soaring cost of living.
The Irish Mirror can reveal the Exchequer is making a killing while ordinary families and consumers suffer, because the more prices rise, the more the taxman collects in VAT.
But despite the increased takings for the Government, Tánaiste Leo Varadkar said again this week that there will be no more help on the cost of living issue until the Budget in October.
It has led Social Democrats co-leader, Catherine Murphy, to warn the Government that they are facing a “winter of discontent” from an increasingly angry electorate.
Figures obtained by the Mirror from the books of the Department of Finance show that VAT receipts to the end of May were just under €9billion, €8.972billion.
This is up almost €2billion on the €6.978billion collected in 2021, a whopping jump of 29%.
Critics point out that the huge increase is down to there being more economic activity as the country exited Covid and started splashing the cash again.
But if we look back at 2019, before Covid, this May’s VAT haul is still 23% up on May 2019, which was the highest ever before this year.
The Social Democrats are calling for an emergency budget to help people cope with the sky high prices we’re seeing as inflation heads towards 8% and above - it’s currently 7.8%.
And Catherine Murphy argues that the extra tax being collected should be “given back to the people through targeted emergency budget measures this summer.”
Ms Murphy told the Mirror: “We have been calling for an emergency budget and we think this underlines the need for it.
“There is money being taken out of people’s pockets and a budget in October wouldn’t make any difference for 2022, it would introduce measures for 2023.
“Also, their assumptions for this year are wrong, I mean, not least because of the war in Ukraine.
“The expectation was that inflation would start coming down in the second half of this year, in actual fact, it’s going in the opposite direction.
“We need an emergency budget and one that’s targeted and we need that immediately.
“We need it targeted at those that are really not going to make ends meet and we’re meeting them (people) all the time.
“The thing about it is there is going to be a political consequence for not reacting to this.
“You can very easily predict that we are now looking at facing into a winter of discontent.”
Finance Minister Paschal Donohoe welcomed the increased tax takings.
He said in a note accompanying the figures: “Reflecting the recovery in consumer spending, VAT receipts to end-May amounted to €9.0 billion, up almost 29 per cent on the same period last year.
“However, the annual comparison is impacted by a number of factors including the public health restrictions that were in place last year.
“In addition, VAT receipts are boosted by the impact of tax warehousing last year and the standard rate of VAT was also lower in the opening months of 2021.
“That said, VAT receipts were 23 per cent higher than in the same period in 2019 (that is, pre-pandemic).”
Mr Varadkar doubled-down on Tuesday afternoon on the Government not introducing any more relief or supports to help with the cost of living.
He said after the weekly Cabinet meeting that they (ministers) have no intentions in that area and confirmed an emergency budget was “not on the agenda” at Cabinet.
