The Government has recorded an Exchequer deficit of €7.4 billion for 2021, including tax revenues of €68.4 billion, an increase of €11.2 billion on 2020's figures.
Income tax receipts also increased during the year, up €4 billion (17 per cent) to €26.7 billion, which the Department of Finance said indicates a strong recovery in the labour market over the past 12 months.
Amid high levels of consumer spending, thanks in part to large amounts of household savings which accumulated during Covid-19 lockdowns, VAT receipts were up by 24 per cent compared to 2020, amounting to €15.4 billion.
Gross voted expenditure for the year totalled €87.5 billion, €1.7 billion less than Budget 2022 expectations, which the department said "reflects the continued provision of Covid supports for the economy and to ensure the provision of public services throughout 2021".
Exchequer deficit of €7½ billion recorded in 2021: Corporation tax receipts at similar levels to VAT, €13½ billion in Covid related expenditure to support recovery – Ministers @Paschald & @mmcgrathtd
Read more: https://t.co/JWSGnuWB7t pic.twitter.com/jQxuXhWYd3
— Department of Finance (@IRLDeptFinance) January 5, 2022
Commenting on the figures, Minister for Finance Paschal Donohoe said the year-end Exchequer returns show the deficit was lower than expected last year, which "reflects several factors, including stronger corporate tax receipts, underspending in voted public expenditure and the more rapid than anticipated recovery in the domestic economy, in particular, the labour market".
Mr Donohoe added, however, that the economic and fiscal outlook has become "increasingly uncertain" due to the emergence of the Covid-19 Omicron variant, prompting the reintroduction of Covid restrictions and income supports.
"Once we overcome this wave of the virus and reopen the economy, it is essential that we pivot away from generalised supports and transition towards more targeted fiscal measures," he said.
The Minister added that corporation tax receipts "continue to underpin revenue growth", but said it is "highly likely" that these receipts will decline "at some stage".
"This is why we must ensure prudent management of the public finances so that we are not left with a structural gap between revenue and expenditure in future years," Mr Donohoe said.
The figures published on Wednesday represent the first set of returns following the State's decision to sign-up to the OECD tax deal which will introduce a minimum 15 per cent corporation tax rate for multinational companies with revenues over €750 million.