Data released by the Department of Finance this week showed tax paid in the economy continues to run ahead of forecasts.

Tax receipts in the month were €7.45bn, some €2.1bn higher than the same month last year.

For the year to date, tax receipts are €6.7bn ahead of last year and an amazing €27.3bn ahead of what the Government took in over the first eight months of 2018 (see Figure 1 below).

In fact, the tax take to the end of August this year has been greater than the tax for all of 2020, where tax receipts to the end of December totalled €57.2bn.

It is clear that when Minister for Finance Jack Chambers comes to making spending decisions for the budget in less than four weeks’ time, he will not be constrained by the amount of money available to spend.

With an election looming, it is likely that the minister will try to spread any positive budget measures as widely as possible - similar to what happened last year, where there were widening of income tax bands and increases in spending on education and child benefits.

Using the spending to make as many people happy as possible makes good political sense.

Agriculture 'down the list'

However, when it comes to specific sectors, there may be fewer individual measures. Agriculture, in particular, seems have fallen down the list of priorities in recent years, with spending allocated to that department falling from 2.5% of the budget in 2018 to 2.01% of the budget last year.

Should it not get a significant boost this year, it will fall below the 2% level, meaning fewer than €1 in every €50 of Government spending will go towards supporting the country’s largest indigenous industry.

The Government has been warned that spending too much money in this report could lead to overheating of the economy, where giving people extra money will just lead to inflation, rather than real economic growth.

However, the argument for increased spending on agriculture can counter this assertion by showing incomes in farming are actually considerably lower than they were in recent years and further support for the sector would only help return spending towards what it once was rather than necessarily cause any inflationary effect.

When the Minister for Finance is making his decisions for the budget, he will have room to support any sector he pleases.

Rather than falling for the temptation of making everyone a tiny bit better off, he could offer significantly more support to a key domestic industry which has suffered a major erosion of income over recent years.