Thursday, January 6, 2011

Understanding the Public Finances is hard

The Irish system of Public Finance is extremely difficult to get a complete handle on.  Here is a 382-page ‘outline’ that explains it all!

The degree of complexity can be seen from the following sentence from the Minster’s press release that was issued with the 2010 Exchequer Accounts yesterday.

While day-to-day spending was marginally ahead of target in the year, this is due to a shortfall in Departmental receipts rather than overruns in spending.

Come again? Spending is up because receipts are down. My head hurts.


  1. The system of allowing department to hold onto receipts as "appropriations in aid" is just another quaint Irish way of hiding whatever it is you don't think people are adult enough to see.
    It is a bad joke.
    The biggest bag of tricks by far is the "Social Fund".
    Here taxeas are paid into the fund in the format of PRSI or levies. Then by some Tommy Cooper like magic, some people are alloed to dip into the lucky bag while others are not.
    All nicely hidden.

    Can I ask, how is the Income levy treated and how ill the USC be treated in the govt account. Will the USC go into the Social Fund or will it be counted as Tax receipts?

  2. Hi Tumbrel,

    I agree completely. All revenue should be counted as revenue and all expenditure should be counted as expenditure. This concept of 'Net Expenditure' just muddies the waters.

    I had a run through these Appropriations in Aid in this post:

    Exchequer Account is not The Public Finances

    The now departed Income Levy formed part of Income Tax so was at least partly visible, though we are not provided with a breakdown of Income Tax receipts by category. The Health Levy was a receipt for the Department of Health so that will be no more.

    The new Universal Social Charge will form part of Income Tax. Expect to see Income Tax receipts up substantially next year as they will be boosted by the combined revenues of both levies in the new USC.