Tax take slumps but decline stabilises

THE tax take continued to slump by €1.4bn in the first five months of the year, but new Exchequer figures show the situation is beginning to stabilise.

Income taxes were €219m, almost 5%, below Government targets, though the Finance Department said it expects to achieve the year end goal of collecting €31bn in overall receipts.

Total tax returns dropped by 10.4% year on year to stand at €12.117bn for the five months to the end of May – 1.2% below Government estimates.

However, capital gains tax came in 32% higher than predictions at €111m, while capital acquisitions tax topped forecasts by almost 17%.

VAT was slightly ahead of forecasts at €4.87bn, while corporation tax was also 3% higher than originally predicted at budget time at €748m. Income tax was 4.9% short of targets, coming in at €4.2bn, and stamp duty was 14% lower than budget predictions, standing at €244m for the five- month period.

Total net voted expenditure by government departments at the end of May was €17.8bn, €1.7bn or 8.9% below spending recorded in the same period in 2009.

The end of May deficit stood at €7.8bn, compared with €10.5bn a year ago, but this was mainly due to technical reasons as payments to the National Pensions Reserve Fund (NPRF) distorted the previous total.

The figures came as the Government came under further pressure to wind down Anglo Irish Bank.

The calls intensified as the Taoiseach admitted winding down the bank over various time frames was an option being considered in talks with the European Commission, but splitting Anglo into a “good” and “bad” bank operation is the preferred outcome, he stressed.

Mr Cowen said an immediate liquidation of the bank would mean a “fire sale” of assets and capital losses of at least €40bn to the state.

If the bank was immediately wound up, the Government would also need to provide €70bn of cash to meet deposits, bondholders and liabilities to the European Central Bank, he said.

Fine Gael finance spokes- person Richard Bruton said managed closure was the only option: “Anglo Irish is the Irish taxpayers’ very own BP oil disaster. It’s time to stop the leak, and make the polluter – not the taxpayer – pay.

“He [the Taoiseach] now appears to be considering a massive U-turn to embrace our policy of breaking up and winding down the bank, and making the professional bondholders share in further losses by withdrawing their guarantee as scheduled in September.

“The Exchequer returns also reveal the startling collapse of 35% in capital spending. Is the Government surreptitiously cutting real capital spending in order to make the Anglo recapitalisation look a bit better in the final accounts?”

He said Anglo could push Ireland’s national debt to double that of Greece.

Labour leader Eamon Gilmore demanded to know what the “bottom of the Anglo pit” was regarding the taxpayers exposure to the bank after an additional €2bn had been pumped into it in the past week.