MINISTER FOR Finance Brian Lenihan has insisted that his budget is still on target despite exchequer returns showing tax revenues running €266 million behind target for the first three months of this year.
The figures show that tax revenue at €7.24 billion for the first quarter was €1.27 billion less than the same period of 2009.
The effects of last December’s austere budget were reflected in the first quarter figures released yesterday.
The Minister said the budgetary decisions taken by the Government in recent months were having the intended impact on public finances and would aid the restoration of much-needed confidence in Ireland.
However, Labour Party finance spokeswoman Joan Burton accused the Minister of trying to gloss over the figures, saying that even if there was no banking crisis they would make for grim reading.
She maintained the economy was heading for 2002 levels of tax revenues.
Fine Gael deputy leader and finance spokesman Richard Bruton said if the trend in falling tax receipts continued, Ireland would be on course for an exchequer revenue tax shortfall of €1 billion by the end of 2010. “As I have said before, the Government’s narrow strategy of fiscal retrenchment, coupled with a policy of writing whatever cheques are necessary, is by no means sufficient to drive economic recovery.”
Department of Finance officials said that the overall exchequer position was “broadly in line” with the Government’s plans and that the shortfall on expectations was due to the timing of companies making corporate tax payments.
Officials expected tax receipts to be higher in the latter half of 2010 as signs of economic growth returned.
Tax receipts would need to be ahead of estimates in the final two quarters of the year if the Government is to meet the budget estimate of €31 billion for the year.
The Government had to borrow €3.94 billion in the first three months, compared with €3.72 billion for the same period last year.
All taxes were down in the first quarter with income tax receipts 10 per cent lower than at the end of March a year ago and some €105 million behind forecast.
VAT receipts were 13 per cent lower than last year and €54 million behind Government expectations, while corporation tax was 74 per cent lower and €102 million lower than forecast.
Capital gains tax was 55 per cent ahead of the Government’s forecast – the only tax which exceeded budget day plans – due to higher levels of share trading.
Mr Lenihan said the department continued to analyse “emerging trends” and that he had “no reason to change my outlook” at this stage.