GOVERNMENT revenues are continuing to plummet, with the tax take for January down about €660 million, or almost 18%, on the same month last year.
But the Department of Finance last night said the figures were in line with expectations, and reiterated its view that the State’s economic health would improve later this year.
The figures showed that last month’s tax take came to €3.074 billion, a reduction of €660m on the figure for January 2009.
The largest fall in percentage terms came in the corporation tax bracket, which fell by 66.5% – or €80m – on the same period last year.
In value terms, the largest fall was in VAT, which fell €353m, or 17.9%, an indication of people’s continuing reluctance to spend.
Income tax was down by €113m, or 9.7%, reflecting the increase in unemployment. Stamp duty was down €20m, or 40.9%.
But while the figures appeared grim, the department cautioned about reading too much into one month’s data.
It is expecting the economic outlook to improve later in the year, in line with forecasts by the Central Bank and others, who have predicted a return to modest growth towards the end of 2010.
Torlach Denihan of Retail Ireland, the IBEC group representing the retail sector, yesterday said that VAT figures highlights a very difficult trading situation. “With retailers taking in less money at the tills the employment prospects for the sector are a very serious concern.
“To cope with declining sales, retailers need help to cut the costs of running their businesses. Landlords are not doing enough to cut rents and the government has yet to take action to reduce the cost burden it imposes on the sector.
“It should build on the decision to ban upward only rent reviews for new leases by addressing unsustainable rent costs through a process facilitated by the Government,” Mr Denihan added.
One Government source pointed out that while the January figures looked bad, the coalition had cut spending by about 13% last year in order to adjust to the lower revenues.
As a result, despite the dramatic decline in the tax take last month, the actual Exchequer deficit only widened marginally compared to January 2009.
The Exchequer ran a deficit of €779m last month, compared to €747m in the same period last year.
But while the Department of Finance said this showed the public finances had stabilised, the Opposition poured scorn on the Government’s economic strategy.
“The January Exchequer figures are disappointing but sadly not surprising given the absence of any new Government interventions to stimulate the economy,” said Fine Gael deputy leader Richard Bruton.
“The minister’s boast at budget time that the worst is over now looks dangerously premature. The truth is that Ireland needed a budget that set out a strategy for economic recovery rather than just a holding operation in respect of the public finances.”
Labour deputy leader Joan Burton said the figures demonstrated the lack of consumer confidence.
“Fianna Fáil’s suggestion that December’s budget would mark a turning point for the economy has turned out to be a damp squib,” Ms Burton said.
“Tax revenues under every heading are down.
“Tax revenues relating to the construction sector, such as capital taxes and stamp duty, continue to fall sharply while income tax and corporation tax are also down,” she added.
“While some of these falls may be due to timing differences, the VAT figures show that consumers have no confidence in this Government.”
Separately, Live Register figures to be published today are expected to show a further increase in the numbers unemployed.
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