Buoyant economy paves way for giveaway Budget
The pre-Budget White Paper on the State’s finances for 2004, published early this morning, shows for the third year in a row, revenues far exceed projections.
The Department of Finance yesterday predicted that, by the end of the year, the Exchequer deficit will be around €850 million, a whopping €2 billion better than the €2.9bn borrowing it predicted the State would require this year.
Given that December is traditionally a good month for Exchequer receipts, there could be little or no deficit at year’s end.
The strong performance has been driven by extraordinary tax revenues, particularly in PAYE, VAT and stamp duties, with the State’s coffers being swelled by an extra €3.5bn compared with 2004 - €1.7bn ahead of projections.
The strong performance is borne out by the more widely defined General Government Balance (GGB), which also includes local government, the Social Insurance Fund, non-commercial semi-State bodies and the National Pensions Reserve Fund.
On Budget Day last year, a deficit of €1.2bn was projected. The out-turn is likely to be a surplus of €439m. But that figure would be better if the Government did not have to make a provision of €1bn for nursing home charges.
Still, for the first time in several years, a GGB surplus of €1.3bn is predicted, confirming the economy as one of the strongest in the eurozone, with growth of 4.5% expected next year.
Fine Gael deputy leader Richard Bruton yesterday said with tax receipts running €1.7bn ahead of schedule, Mr Cowen could cut the lower tax rate by 1% (from 20% to 19%) and allow full indexation of tax credits and bands.
“The minister would still have sufficient resources to fund major programmes of improvement in social welfare, childcare and care of older people,” he said.
Labour Party finance spokeswoman Joan Burton said the minister had the scope to address the needs of hard-working families.
She said infrastructure spending is still lagging behind, costing the economy and society dear.
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