Tax revenues €2.8bn below Government target

Tax revenue collected by the Government in the first eight months of the year has slipped 10 per cent behind the projections made by the Department of Finance at the beginning of the year.

The Exchequer returns figures for August reveal a worsening picture for public finances, as the economy continues to weaken.

The total tax revenue received by the Government for the first eight months of 2008 arrived at €24.7 billion. This compares to an expected tax take of €27.5 billion for the period.

The €2.8 billion shortfall is already approaching the €3 billion shortfall projection for the full-year that the Government made in July.

Taking the month of August on its own, the tax take fell €500 million short of expectations. If this pattern continues for the remaining four months of the year, the tax shortfall for 2008 will be close to €5 billion.

Every major category of tax remains below the Government's forecasts, with the tax haul from the property-related taxes dropping the most behind target.

Lower than expected receipts from capital gains tax, stamp duty and VAT are responsible for three-quarters of the total tax shortfall for the year.

The Exchequer deficit for the first eight months of the year was €8.4 billion, three times the figure for the same period in 2007.

Government spending is running slightly ahead of target, with the sharp rise in the numbers of people claiming Jobseekers Benefit and Allowance putting pressure on the social welfare budget.

Responding to the figures, Fine Gael deputy leader Richard Bruton said it was time for the Government to come out of hiding and tackle the economy.

“In the time the Government have been away on holidays their July predictions for the economy and taxes have been shown to be 100 per cent off target,” the party spokesman on finance said.

“The figures just released show that that is exactly what is happening. It is now time that the Government to put away their golf clubs, suntan lotion and Dan Brown paperbacks and got a grip on the deteriorating Irish economy," Mr Bruton continued.

“The reality is that the deterioration in the public finances is accelerating.

“This alarming swing from surplus to deficit is not due bad luck, it is down to Brian Cowen’s reckless management of the public finances over the last four years. . . . The Government is unprepared, because in the good years, it undertook no reform,” Mr Bruton added.

Labour Party finance spokeswoman Joan Burton said the figures showed a "further huge black hole" opening up in the Government accounts.

She said the downturn in VAT figures was a "sure sign of the serious downturn in employment and in consumer spending".

"The Government has been absent on holidays for all of August. Other European governments which are experiencing the difficulties of the credit crunch have at least been meeting to address the crisis. In Spain the prime minister recalled his cabinet in the middle of August to address the crisis and announced a series of measures to improve the economy.

"Where has our Minister for Finance been? There is no evidence that he is getting to grips with the scale of the difficulties now facing families and businesses throughout the country."