THE EXCHEQUER deficit for the first four months of the year was €6.96 billion. Exchequer returns for the period to the end of April, released yesterday, showed the deficit compared favourably with the same period in 2009, when the deficit was €7.3 billion.
Tax revenues fell to fractionally above €9 billion from €10 billion the previous year but the four-month total was in line with Government targets for the period.
Among the major tax categories, income tax has yielded €3.5 billion to date this year, 2.4 per cent below target. VAT revenue at €3.4 billion is fractionally ahead of the tax profile set down by the department, while income from excise, at €1.33 billion, marginally undershot its target.
Corporation tax (€307 million) was 22 per cent up on the Government’s target, and stamp duties (€187 million) were down 20 per cent from target. Capital gains tax returns, which have been decimated by the recession, saw a jump of 44 per cent to €109 million in the first four months of the year.
Net voted expenditure was €14.3 billion, 8.1 per cent below the 2009 figure.
There was a sharp difference in emphasis in the responses of market commentators and Opposition politicians to the returns.
Fine Gael’s finance spokesman said the figures showed that national debt was rising by €40,000 every minute. Richard Bruton said the fiscal austerity being pursued relentlessly by Minister for Finance Brian Lenihan was not a credible policy.
“It won’t give the economy the kick-start it needs and will do little or nothing to create essential new jobs,” he said.
Labour Party finance spokeswoman Joan Burton said the returns highlighted the frailty of the economy.
“Without a coherent jobs strategy, the economy will continue to struggle and lifeless tax returns will put pressure on the exchequer deficit.”
Economists with the stockbroking firms, however, saw the figures as marking the bottoming out of the economic contraction and the potential beginnings of a recovery.
Rossa White of Davy said there was an inherent lag in tax receipt figures. “We know that real economic activity has steadily improved month-on-month throughout the year. So the momentum suggests it won’t be long before tax revenue is actually ahead of forecast.”
Alan McQuaid of Bloxham said the figures for the first time showed a deficit that was lower than at the same time in 2009.
He said that, all in all, he believed the risk to economic growth forecasts was now on the upside.
“If the Government can hold its nerve and continue to move in the direction it has taken, then there is every reason to be optimistic about its chances of stabilising the public finances over the next few years if global economic conditions improve and the euro zone debt saga doesn’t drag on too long.”
