Exchequer figures show fall in January tax take

Tax revenues collected by the Government stabilised in January, but at low levels, the latest exchequer returns data from the Department of Finance shows.

The Government collected just over €3 billion in tax in the first month of 2010, down from €3.7 billion collected in the same month last year.

However, the year-on-year rate of decline in tax revenues continued to ease slightly. The year-on-year rate of decline in receipts is now 17.7 per cent, according to figures published this afternoon, while for last year as a whole, tax receipts fell 19 per cent compared to 2008.

Ireland's overall budget deficit stood just shy of €780 million at the end of January, compared to €747 million at the same point in 2009.

Receipts from VAT, a key indicator of consumer spending, arrived at €1.6 billion for the first month of the year, down 17.9 per cent on January 2009.

Economists are waiting to see whether the low levels of consumer activity in January, which included the fall in VAT receipts and subdued sales of new cars, was largely the result of poor weather conditions or if they reflect an ongoing weakness in consumer confidence.

Labour Party deputy leader and finance spokeswoman Joan Burton said January's tax receipts indicated that Fianna Fáil's suggestion that the Budget would mark a turning point for the economy "has turned out to be a damp squib".

The Government collected a little more than €1 billion in income tax during the month, down 9.7 per cent on last January's figure.

Alan McQuaid, economist at stockbroking firm Bloxham, said that given the tax take for 2009 had eventually been higher than anticipated, the overall outturn for 2010 was also likely to be better than forecast, as it was starting from a stronger base.

Current or day-to-day spending by the Government was down almost 12 per cent in January compared to the same month in 2009.

A breakdown of spending by Government departments confirms the sharp cutbacks in departmental budgets that have been imposed during the economic crisis. Only three departments spent more last month than they did in January 2009 - the Department of Agriculture, Fisheries and Food, the Department of Enterprise, Trade and Employment and the Department of Social and Family Affairs.

"All told, we expect day-to-day spending to come in lower than officially projected this year as the Government keeps a tight rein on the expenditure side," Mr McQuaid said.

According to a new profile of debt service expenditure issued today, the Government expects that some €5.1 billion of the €31 billion it expects to receive in tax revenue in 2010 will be used to service the national debt. This equates to 16.6 per cent of the tax collected, or around €1 for every €6 in tax.

By the end of 2014, the Department of Finance estimates that more than €1 in every €5 collected in tax will be required to pay the interest on Ireland's debt.