Topic 1
Budget cycle
The budget cycle in Ireland is a continuous process that spans over the course of a year. The budget
speech delivered by the Minister of Finance is just one element of this cycle. Here are the key phases of
the budget cycle in Ireland:
April: Ireland submits its Stability Programme Update to the European Commission. This outlines fiscal
and economic forecasts for three years, in line with our compliance with the EU’s country-specific
recommendations and fiscal rules.
June: The Summer Economic Statement is published. This provides an updated assessment of the macro-
economic and fiscal prospects, including the medium-term fiscal framework. The National Economic
Dialogue is held to facilitate an open and inclusive exchange on the competing economic and social
priorities in advance of the Budget. These discussions can then inform Government and Oireachtas
considerations.
July: The publication of a Mid-Year Expenditure Report (MYER) that identifies baseline pre-Budget
expenditure ceilings.
August: The publication of Spending Review papers.
October: All documents published on Budget Day (generally the second Tuesday in October) are made
available on a dedicated Budget website, including: the Minister’s speech, the Expenditure Report, the
White Paper (estimates of receipts and expenditure for the year ahead), and tax policy changes. Ireland
submits its draft Budgetary plan for the following year to the European Commission, detailing the
underlying fiscal and economic forecasts and fiscal plan to comply with the EU’s country-specific
recommendations and fiscal rules (part of the European Semester).
November: The European Commission releases its assessment of Ireland’s draft Budgetary plan.
December: The Revised Estimates Volumes for the Public Service (also known as the ‘REV’) provide
additional details on the figures in the Expenditure Report.
Monthly: The Fiscal Monitor summarizes high-level revenue and expenditure information from month to
month. All revenue and expenditure returns are measured against targets called ‘profiles’, which are set
at the start of the year. These are based on the forecasts that were published in the Budget.
The Department of Public Expenditure, NDP Delivery and Reform and the Department of Finance are
responsible for the budget proposals. The Irish Parliament, Oireachtas, is responsible for the approval of
the budget. The budget is prepared for a fiscal year, which runs from January 1st to December 31st.
Before the preparation phase, macroeconomic projections are made to outline the fiscal and economic
forecasts for the next three years.
Topic 2
Tax system
The tax system in Ireland is progressive, meaning that those on higher incomes pay proportionately
higher rates of tax than those on lower incomes. The tax year in Ireland runs from 1 January to 31
December. If you are an employee, you pay tax through the Pay As You Earn (PAYE) system. You will
normally pay Income Tax (IT), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) on
your employment income. If you are self-employed, you are taxed under the pay and file system. You can
manage your taxes online using myAccount or Revenue Online Service (ROS).
Tax revenue
tax revenue in 2022 was €83.1 billion, an annual increase of €14.7 billion (22 per cent)
income tax receipts last year amounted to €30.7 billion, up 15 per cent on 2021, and consistent
with the strong post-pandemic recovery in employment
corporation tax receipts amounted to €22.6 billion last year, 50 per cent higher than a year
earlier – for the first time ever, this is the second-largest source of tax revenue
VAT receipts were €18.6 billion last year, up €3.2 billion (over 20 per cent) in 2021, reflecting the
post-pandemic rebound in consumer spending
total gross voted expenditure in the year amounted to €88.8 billion, €1.2 billion or 1.4 per cent
above 2021, with additional spending on core services and investment, and on cost of living
supports, being partially offset by the unwinding of COVID-19 measures
an Exchequer surplus of €5 billion was recorded last year
Budget system
The budget system in Ireland is a year-long process divided into four main stages: formulation, approval,
execution, and oversight. The government spending for the year ahead is announced by the Minister in
the Budget speech, which is simply one element in a budgetary cycle that takes place continuously over
the course of the year.
At the local level, each local authority determines its own spending priorities in the context of the annual
budgetary process having regard to both locally identified needs and available resources.
Budget decision making
The budget decision-making process in Ireland is a phased process that involves input from various
stakeholders. The process starts with the Stability Programme Update which outlines the
macroeconomic and fiscal forecasts for the coming years. The National Economic Dialogue is then held
to discuss the economic and social priorities of the country. The Summer Economic Statement is
published in July and provides an update on the current fiscal position and the government’s budgetary
intentions.
The Budgetary Cycle then begins with the Draft Budgetary Plan which is published by the Department of
Finance and the Department of Public Expenditure, NDP Delivery and Reform. This is followed by the
Mid-Year Expenditure Report which provides an update on the implementation of the current year’s
budget. The Budget is then announced by the Minister for Finance and the Minister for Public
Expenditure, NDP Delivery and Reform.
On the local level, each local authority determines its own spending priorities in the context of the
annual budgetary process having regard to both locally identified needs and available resources. The
budget is developed in a phased process involving input from the Chief Executive, the Municipal District
members, and the Corporate Policy Group.
Budget approval phase
The public budget approval phase in Ireland is a process that involves the government’s presentation of
the budget to the public and its subsequent approval by the Irish parliament. The budget is presented to
the public in the form of a speech by the Minister for Finance, which is broadcast live on television and
radio. The speech outlines the government’s spending plans for the coming year, including any new taxes
or changes to existing taxes. The budget is then debated in the Irish parliament, with opposition parties
given the opportunity to propose amendments. Once the debate is concluded, the budget is put to a
vote in the Dáil Éireann, the lower house of the Irish parliament. If the budget is approved by the Dáil
Éireann, it is then sent to the Seanad Éireann, the upper house of the Irish parliament, for further debate
and approval. If the budget is approved by both houses of the Irish parliament, it is then signed into law
by the President of Ireland.
Regarding the news on approving the budget, the Irish government has recently unveiled the Budget
2024. The budget includes 21 key measures, such as once-off payments, income tax cuts, tax credits, USC
cuts, renter supports, mortgage interest relief, and more. The budget was presented by Finance Minister
Michael McGrath and Public Expenditure Minister Paschal Donohoe. The budget measures were
broadcasted live on television and radio, and the public will see the benefit of Budget 2024 before
Christmas, given that energy bills will be landing this month and prices at the pump have already been
reduced.
Public budget execution
The Irish government’s budget execution is overseen by the Department of Public Expenditure and
Reform and the Department of Finance. The budget for 2021 was published on September 24, 2021, and
the expenditure report for 2021 was released on October 12, 2021. The budget is prepared against a
background of extraordinary uncertainty regarding near-term economic and fiscal prospects. The
budgetary governance principles of the Irish government include ensuring that budget documents and
data are open, transparent, and accessible, providing for an inclusive, participative, and realistic debate
on budgetary choices, presenting a comprehensive, accurate, and reliable account of the public finances,
and actively planning, managing, and monitoring budget execution.
Liquidity management
The Irish banking market provides access to a full range of short-term investment and borrowing options.
Most forms of cash concentration and notional pooling are available and widely used in Ireland.
Accounts held by resident and non-resident entities may participate in the same liquidity management
structure. Many large cash management banks have operations in the International Financial Services
Center, while tax and regulatory benefits have encouraged a number of large multinational companies to
establish their European treasury operations in Ireland.
Budget classification
In Ireland, the budget classification system is based on the programme-based budgeting (PBB) approach.
This approach is used to link the budget to the government’s policy objectives and to ensure that
resources are allocated to the most effective programmes.
The PBB approach classifies budgetary spending into programmes and sub-programmes. A programme is
a group of activities that contribute to a specific policy objective, while a sub-programme is a group of
activities within a programme that share a common objective.
For example, the Department of Education and Skills has a programme called “Primary and Post-Primary
Education” which has several sub-programmes such as “Primary Education”, “Post-Primary Education”,
and “Special Education”.
This classification system allows for greater transparency and accountability in government spending by
providing a clear link between policy objectives and budgetary allocations.
Budgetary funds
Ireland’s budgetary funds are the financial resources allocated by the government to fund various public
services and programs. These funds are raised through various sources such as taxes, levies, and other
revenues. The government uses these funds to finance public services such as healthcare, education,
housing, and infrastructure development, among others.
The Budget 2022 is a high-level overview of how money will be raised and spent in 2022. It includes key
measures such as free GP care for children aged 6 and 7, lowering the threshold for the Drug Payment
Scheme to €100, €250 million to tackle hospital waiting lists, free contraception for women aged 17-25,
and expanding dental access to medical card patients, among others.
In addition, the Future Ireland Fund is a €100 billion wealth fund that will be set up by mid-2030s. It will
be seeded with an initial €4 billion from the existing budget reserve. From 2024 until 2035, an amount
equivalent to 0.8% of GDP will be paid in every year, which in 2024 will be around €4.3 billion. The fund
will be used to protect infrastructure spending during economic downturns and invest in climate change
measures.
Auditing system in Ireland
The Irish government has a well-established system of internal and external audits to ensure
accountability and transparency in the use of public funds. The Internal Audit Standards for Government
Departments and Offices is a set of guidelines that outlines the principles and practices of internal
auditing in Ireland. The standards were established by the Institute of Internal Auditors and are
applicable to all government departments and offices. The standards cover areas such as the mission of
internal audit, definition of internal auditing, core principles for the professional practice of internal
auditing, code of ethics, and international standards for the professional practice of internal auditing.
The Comptroller and Auditor General is responsible for carrying out an annual audit of the state’s
accounts and submitting an annual report of the audit to Dáil Eireann. The Comptroller and Auditor
General is nominated by Dáil Eireann and appointed by the President. The Office of the Comptroller and
Auditor General is responsible for ensuring that public funds are used efficiently and effectively.
Capital budget
Ireland’s budget is divided into two parts: the capital budget and the current budget. The capital budget
is used to fund long-term investments such as infrastructure, while the current budget is used to fund
day-to-day expenses such as salaries and social welfare payments. Therefore, capital investments are
budgeted separately from the state budget in Ireland.
Capital investment
The Irish government has announced the largest national development plan in the history of the state as
it unveiled spending proposals for the next decade.
The plan envisages a total investment of €165bn (£141m) between now and 2030 on various capital
projects such as housing and transport infrastructure.
Those projects include the Irish government funding the Narrow Water Bridge between counties Louth
and Down, the Ulster Canal and the A5 road as well as more money to be spent on greenways, higher
education, biodiversity and industrial parks.
The government’s target is to build 300,000 new homes by the end of 2030, which would include 90,000
social homes, 36,000 affordable purchase homes and 18,000 cost rental homes.
Capital expenditure
Ireland’s capital government expenditure has been increasing in recent years. According to the Spending
Review 2021 report, capital expenditure has increased by 85% from 2015 to 2019, while current
expenditure has increased by 20%. The National Development Plan (NDP) 2021-2030 aligns the
government’s capital expenditure with Ireland’s infrastructural needs for the current decade. The Budget
2023 Expenditure Report states that capital expenditure will increase by €0.8 billion in line with the NDP.
The Where Your Money Goes website shows that capital expenditure accounts for 13% of the total
expenditure in Ireland, which amounts to €12.58 billion.
