Figures released by the Department of Finance show another sharp deterioration in the public finances last month. Tax receipts are now almost €2.8 billion short of budget time projections.The tax shortfall for 2008 will be double (€6bn) the amount predicted by Brian Cowen and Brian Lenihan a mere 7 weeks ago when they said that there would be a €3billion shortfall in taxes, according to Fine Gael's Deputy Leader and Spokesman on Finance, Richard Bruton T.D .The Exchequer deficit for the first eight months of the year was just over €8.4 billion. This is three times the figure for the same period last year.
August is the worst month on record with tax revenue over 20% short of expectation. It is anticipated that the Exchequer deficit will amount to €10 billion by the end of the year.
Total tax receipts were just under €24.8 billion, with VAT receipts running more than €1.1 billion behind expectations as consumer spending weakens. Stamp duties are almost €500m behind target and capital gains taxes are more than €400m lower than expected. The contraction in the building industry is a major causative factor here. Income tax is around €150m behind expectations.
"The Government has breached the 3% Stability Pact constraint on borrowing. It is heading for 4% borrowing in 2008 as a percentage of GDP. It will in all probability come in at 4.5%- 5% in 2009.
It is time to take out the hair shirts once more. A savage December budget is a certainty.
The excessive rise in public expenditure-13% in 2007- in the run in to the 2007 General Election has further exacerbated the situation. The Government now has nothing in reserve to stimulate the economy. All in all not a very pretty picture in the run up to Christmas