Lenihan stresses need for fiscal 'discipline'

Newly-appointed Minister for Finance Brian Lenihan today stressed the need for fiscal “discipline” in the management of Exchequer finances and ruled out further changes to stamp duty.

Speaking on RTÉ's Morning Ireland,Mr Lenihan repeated the word "discipline" four times when describing the approach he planned to take as the economic slowdown erodes tax revenue.

"It is a tough time but I think it is important that on the one hand we exercise the necessary discipline that is essential given the international conditions," he said. "One the other hand we identify clear opportunities for Ireland to grow and progress in the future."

He described the current economic conditions as the most challenging any new Minister for Finance had faced in two decades.

Exchequer returns for the end of April showed that the Government collected €736 million less in tax revenue during the first four months of the year compared with the same period in 2007. This is 5.3 per cent short of official targets.

The slowdown in the construction sector is largely responsible, with receipts from capital gains tax €334 million below expectations and VAT receipts €277 million - or 5 per cent - less than expected over the same period.

The cumulative result is that the Exchequer has incurred an overall deficit of €3.74 billion during the first four months of the year.

Unemployment is also rising and there were199,700 people on the live register in April, marginally down from the nine-year high recorded in March. The unemployment rate is 5.5 per cent.

Mr Lenihan this morning also ruled out any reform of stamp duty. House prices were down almost 9 per cent in March compared with the same month last year.

"I am certainly not going to raise expectations in that department this morning or respond to some kind of stimulated clamour about it . . . . I don't believe stamp duty is central to the current difficulties in the housing market."

He said Ireland taxes property through a transaction tax and described the idea that such taxes could be abolished to stimulate the sector as "misguided".

"Most of our partner countries in the European Union have very substantial property taxes on private residential property, we don't."

However, he indicated that this was an area to which he may return in future. "If there is an overwhelming popular demand to replace stamp duty with a property tax I will certainly examine it," he said.

In a recent report, the OECD called for the introduction of a property tax in Ireland.