Government’s financial woes worsen as tax take down €4bn

THE Government’s money woes continued yesterday, with new figures showing it had raised €4 billion less than expected in taxes by the end of last month.

The hole in the public finances continues to grow, with the Exchequer deficit now standing at €11bn.

The shortfall in taxes is a major factor in the mushrooming deficit, and could result in another emergency budget in the spring, Fine Gael claimed last night.

At the start of the year, the Government predicted total tax take would reach €35.76bn by the end of October.

In fact, the tax collected reached just €31.47bn, a shortfall of almost €4.3bn, according to the October exchequer figures published yesterday.

Declining consumer confidence contributed significantly to the shortfall, with the amount of VAT raised between January and October coming in a massive €1.6bn below projections at the start of the year.

Similarly, the slowdown in the property sector impacted heavily on revenues, with the amount of stamp duty taken in almost €859m lower than expected.

Corporation tax was down €558m and income tax down €257m — figures that underscore the fact that company profits are being driven downwards and unemployment upwards.

Fine Gael deputy leader Richard Bruton said the figures cast even more doubt over the credibility of the Government’s budget arithmetic and competence.

“The Cowen-Lenihan economic strategy is creating the worst deterioration in the public finances in the history of the state. It is alarming to see a Government which is making it up as it goes along,” he said.

“The nation was promised that Budget 2009 would outline a strategy for economic revival. It has utterly failed in this objective.

“Instead we have had the spectacle of a Government ... with no clear notion of the direction in which it seeks to take the country.”

The figures “increase the prospects of a new budget in the spring of next year,” Mr Bruton added.

But the Department of Finance said yesterday’s figures were “broadly in line” with what it had been expecting. The department is standing over the projections made in last month’s budget, which envisaged a tax shortfall of €6.5bn by year’s end and an overall Exchequer deficit of €11.5bn.