20% of tax take to pay debt by 2014

AT least 20 cent of every euro paid in tax will be used to pay interest charges on the country’s national debt by 2014, according to new Department of Finance projections.

The Government borrowed €70 million a day to help run the country in 2009, which was last night branded by the opposition as “a dismal year for the Irish economy”.

Finance Minister Brian Lenihan admitted that “the challenges we now face are great”.

He warned: “The Government has maintained a tight control over public spending and this will continue given the reduced resources of the state.”

The Government’s latest official tax figures show it took in €33 billion in revenue in 2009 – a drop of 19%, or €7.7bn, from 2008, and €1.4bn less than anticipated in last April’s emergency budget.

The national debt has spiralled from €25bn in 2007 to €50bn in 2008 and €75bn in 2009.

The Government spent €2.5bn in the past year servicing this debt, meaning that 8c of every euro taken in by the state is used to pay off interest.

This will rise to a fifth of all tax by 2014.

Mr Lenihan said the impact of rising debt levels “is clear evidence of the need to take action to achieve long-term sustainability of the public finances”.

The tax take was down in all areas including:

* VAT down 20.6% from 2008.

* Income tax down by 10%.

* Corporation tax down 23%.

* Capital Gains Tax down 62%.

The 2009 deficit, or overall borrowing requirement, of €24.6bn was worse than anticipated in last April’s emergency budget, but better than expected in December’s budget.

“This is welcome news,” said Mr Lenihan.

“Given the small improvements in the actual deficit over that anticipated in the December budget we face into this year’s task with a greater sense of confidence.”

But the rate of deterioration in the public finances “has not improved in any meaningful way” according to Fine Gael’s spokesman on finance Richard Bruton.

“It would be very foolish to assume that these figures represent a turning point,” he said.

“While the December tax take appeared strong, this mostly reflected the move in the deadline for capital gains tax from the end of October in 2008 to mid-December in 2009. This led to a one-off boost in the year-on-year comparisons.”

Labour’s spokeswoman on finance, Joan Burton, said there is ” little solace to be drawn” from the figures.

She said: “These figures show the economy in the grip of one of the worst recessions in the industrialised economies since the Second World War.”

Ms Burton said the exchequer returns ” highlight again the absence of a coherent jobs strategy”.


Lifestyle

With (hopefully) better weather on the way along with the longer evenings, gardening and nature offer a nice distraction to the news cycle.Podcast Corner: Green fingers and creature comforts

From Kaia Gerber to Oprah Winfrey, why not let a famous face choose your next read?The 4 best celebrity book clubs to virtually join

Because privacy is a privilege, not a right.8 things you’ll only know if you’re self-isolating with your parents

This week we had a lockdown birthday party, too much TV and a reminder from Joe Wicks that I’m 53Learner Dad: What I learned from week two on lockdown

More From The Irish Examiner