Tuesday, August 5, 2008

Irish Public finances take another hit in July

Worst Deterioration in the Public Finances in History Sees Taxes Fall 9% Below Target.

"- Monthly tax take was €776m (18%) short of expectations

- this is by far the worst month so far for the public finances. VAT proceeds alone were €447m (or 20%) below expectations, while all major tax heads were significantly below target.

- For the year-to-date, tax receipts are now €2.2bn (8.9%) below budget expectations.

- Only last month, the Government produced a revised budgetary forecast predicting that the tax shortfall would be limited to around €3.0bn (a 6.1% shortfall).

- But if the current trajectory for taxes continues (and there is no reason to expect it to improve), and assuming the Government manages to limit spending in line with budget allocations (which is by no means certain), we can now expect the tax shortfall to be at least €4.4bn (8.9%).

- This would equate to a General Government Balance of around €6.2bn (3.3% of GDP), suggesting that Ireland is on course to breach the EU's 3% of GDP borrowing limits this year.

- These figures represent the worst deterioration in the public finances in the history of the State."FG

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