Income tax revenue €300m lower than target

THE Government collected €300 million less than expected in income tax for the first six months of the year because of the continuing jobs crisis.

Figures released yesterday showed that public finances overall were broadly in line with expectations for the first half of the year, with an Exchequer deficit of€8.9 billion recorded for that period.

While the size of the deficit was anticipated due to pressures on the public purse, it would have been lower if tax targets had been reached. The total tax take to the end of June came to €14.4bn, some €227m behind target.

The biggest culprits were income tax, which was €304m behind target for the first six months of the year, and stamp duty, which was €44m behind target, reflecting the weakness of the property market.

Excise duty was also behind target by some €23m, which finance officials said was an indication thatpeople were choosing to drink at home rather than in pubs.

There were some consolations in the tax take, however, with VAT €50m ahead of target, indicating that consumer confidence more generally is improving.

In a statement, Finance Minister Brian Lenihan said the Exchequer deficit was “generally in line” with his department’s expectations, and that taxes were “broadly moving in the right direction”.

He conceded the weakness in income tax was “of concern”, but added: “In overall terms, the budget day target for tax revenue in 2010 of €31bn remains achievable.”

But Fine Gael finance spokesman Michael Noonan said the disappointing income tax performance, as well as separate figures this week showing more than 452,000 people on the Live Register, indicated that the jobs crisis was worsening.

“Cutting the public deficit and saving the banks alone will not solve the jobs crisis. Indeed, if these data show anything, it is that we will never solve the fiscal crisis until we help people back to work,” he said.

Labour’s finance spokeswoman Joan Burton questioned why the Government’s spend on capital projects was running over €600m behind target, saying it would be counterproductive to hold on to this money as such investment created jobs.

A spokesman for Taoiseach Brian Cowenacknowledged the need to focus on jobs, but said the figures proved the Government had taken the right decisions in the budget to stabilise the economy.

“This is little comfort to those who have lost their jobs so, having now stabilised the economy, the Government’s priority is to translate these positive indicators into jobs, while continuing on the budget adjustment path we have agreed with the European Commission,” he said.

Meanwhile, Mr Lenihan will appear at the Oireachtas finance committee on Monday to discuss the banking inquiry. His appearance was rescheduled from this week after Mr Lenihan came down with flu on Tuesday.

A spokesman said he had been advised to take “a few days off”.


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