Impact of multinationals windfall clearer as Budget looms

As the clock ticks down to the Budget, the full impact of the windfall from multinationals is becoming clearer.

Last night the Government published its latest snapshot of public finances.

It shows the State will run significant surpluses this year and next - leaving the Coalition in a much stronger position than was thought just days before the Budget.

Minister for Finance Jack Chambers and Minister for Public Expenditure Minister Paschal Donohoe were making conservative noises about what the funds would be used for at their press conference yesterday.

However they did indicate it could be spent on infrastructure, while they ruled out using it for tax reductions or day-to-day expenditure.

The Apple back tax will be arriving in two separate tranches, one this year and one next.

But the Government received advice from the Central Statistics Office and the full amount will be booked into this year's accounts.

Separately, the Department of Finance has given a new forecast for how much tax revenue it will collect.

This has been boosted by much better-than-expected corporation tax receipts, but other areas are strong, too.

The Government had forecast corporation tax would be €24.5 billion this year but the final figure will be €29.5bn.

Last night, the Government's White Papers of spending and receipts confirmed the Government will have a surplus of €25bn for this year.

To put that in context, total spending to run the country is due to be almost €100bn this year.

And there is more good news: there will be a substantial surplus next year of €12bn.

If the Government does decide to spend on infrastructure there are plenty of areas that need investment such as water infrastructure, housing and the electricity grid.

However, the Minister for Finance has been warned about the dangers of fueling inflation by spending it all quickly.

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The reality is that the economy is remarkably healthy, and unemployment is very low despite a significant rise in the population.

So, there is no reason to add fuel to the fire, according to the Irish Fiscal Advisory Council.

The council’s chairman Seamus Coffey said there is "obviously no case for a fiscal stimulus" and argues "throwing money at these things" is not the answer.

Instead, Mr Coffey says money should be spent on infrastructure gradually and it should not be tied to one-off windfalls such as Apple’s back tax.

But the difficulty for the Coalition, as it faces into the Budget and a subsequent general election, is that fiscal prudence may be a difficult sell for an administration awash with cash in the middle of a housing crisis.