Ireland’s “extraordinary” budget billions are to be fed into a new reserve fund rather than spent on new housing, healthcare, transport or electricity infrastructure.

Despite a looming election and calls from think tankers, social justice activists and opposition politicians to build more homes and add more hospital beds, the Government has pledged to bank its latest unexpected budget surplus and keep cutting any remaining crisis spending.

That is despite Department of Finance predictions that windfall corporation tax revenues will continue to rise for the next three years, leading to an overall budget surplus of €10bn this year and more than €20bn by 2026, as the economy keeps growing.

But officials also believe that around half of the corporation taxes fuelling that budget bonanza - €12bn out an estimated €24.3bn this year, or just under 10pc of the year’s total expected tax take - could soon disappear.

Finance Minister Michael McGrath said the level of corporation tax receipts Ireland has been taking in over the last decade is “nothing short of extraordinary” and that the “day will come” when that windfall is no longer there.

“We have to make very good use of the sweet spot that we are now in, in relation to the public finances, because we know it’s not going to last,” he said on Tuesday after his department published the stability programme update, effectively launching the planning stage for Budget 2024.

“We cannot be, by any means, certain that we will achieve surpluses of that order. While we have these surpluses, we’re going to start the process of putting money away.”

The Government wants to save and invest windfall corporation tax receipts into a new long-term fund to help pay for future pension and healthcare costs. It would be separate to the existing reserve fund of €6bn and will require new legislation.

Contributions to the fund will be “linked” to windfall receipts, Mr McGrath said.

Corporation tax receipts are now around five times what they were a decade ago and double pre-pandemic levels, but are concentrated in a few large multinationals.

“A dip in 2023 earnings for a few large companies based in Ireland would have a huge impact on corporation tax receipts and our budget surplus,” said Peter Vale, tax partner at consultants Grant Thornton Ireland.

However, the Government is predicting overall tax revenues – including corporation tax – will keep rising out to 2026.

Dr Seán Healy, chief executive of Social Justice Ireland, said the money should be used for infrastructure, starting with social housing.

But Housing Minister Darragh Murphy told US business leaders recently that Ireland doesn’t have the capacity to build any more homes than the 33,000 a year (on average) it has pledged up to 2030.

Neither Mr McGrath nor Public Expenditure Minister Paschal Donohoe is ready to commit to any budget giveaways. At least not yet. 

Whether they will be able to resist calls from other government departments or future election candidates for a bigger slice of that “extraordinary” budget pie has yet to be seen.