Govt to look for more savings

The State’s books are almost €11bn in the red with the Government warning another year of huge cuts will be harder to achieve.

Finance Minister Michael Noonan said when the billions used to rescue banks is taken out of the equation, increased taxes and other savings have brought the deficit down by €1bn.

Mr Noonan said Ireland was on course to take in €34.9bn in tax this year and that last week’s VAT cut and changes to the minimum wage will help economic recovery.

“The Exchequer deficit in the first six months of the year, at €10.8bn, is in line with my department’s expectations at this point in the year,” he said.

But Mr Noonan warned that a further tough Budget can be expected in December when the Government looks to make up to €4bn in savings.

“That’s going to be difficult and it’s going to be difficult on Government departments. A lot of the low hanging fruit has been picked in terms of government programmes so next year’s cutbacks will be more difficult to achieve and yet they’re vitally important,” the minister told RTÉ.

“I’ll be saying to my colleagues in Government the job isn’t even half done yet.”

With a team from the International Monetary Fund and Europe back in Ireland this week to review efforts to balance the books, Mr Noonan said the Exchequer returns showed targets set in the bailout agreement are being met.

According to the Department of Finance, tax receipts in the six months to the end of June were €15.3bn and almost 6% above the same period last year.

“This is encouraging following three years when tax revenues fell by one-third,” Mr Noonan said.

The Minister said that taxes were slightly below the target, falling short by €115m.

“It is the case that individual tax-heads have shown a mixed performance so far in 2011. Corporation tax and VAT were a little weaker than expected,” he said.

“On a more encouraging note, income tax is in line with what is a very large target due to the introduction of the Universal Social Charge and other budget measures.

“Receipts from excise duties have continued the good performance of last year into the first half of 2011.”

Exchequer coffers will be further boosted thanks to the levy on private pension holdings introduced to fund the Jobs Initiative.

Elsewhere, Minister for Public Expenditure and Reform Brendan Howlin said spending at the end of June was 1.5% below the target.

“This reflects the ongoing tight control of public spending. We must ensure that this tight control is maintained over the coming months and that emerging pressures, of which there are some, are managed by Government Departments from within their existing allocations,” Mr Howlin said.