Tax receipts 2.8 billion below expectations-Hairshirt budget anticipated in December

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

Ireland-Government cut-backs begin to bite

A Winter of discontent is looming in the Irish health service.


Delegates at the Irish Nurses' Organisation (INO) annual conference have passed an emergency motion condemning a ban on recruitment introduced by the Health Service Executive (HSE) earlier this month.
The emergency motion put to delegates in Killarney was in response to cutbacks introduced by the HSE on September 4th in an attempt to reduce a €245 million financial deficit.

Fine Gael Health Spokesman James Reilly TD has condemned the extensive front line job cuts at Sligo General Hospital saying that it was clear that patient care would be adversely affected.
"Cutbacks have been the order of the day since Fianna Fail and the PDs were returned to Government with hospitals in Ennis, South Tipperary, the Midlands and now Sligo particularly hard hit.
"The jobs cut today include 30 nurses and four consultants so once again we are seeing cutbacks hitting front line staff while the bloated bureaucracy within the health service remains untouched."

According to FG TD Joe McHugh:
Fianna Fáil has slashed funding for community childcare groups also. "Under the previous EU-funded programme, all working parents were entitled to funding towards their childcare expenses. But the Fianna Fáil Government has withdrawn this incentive for mothers to enter the world of work. The Government's new scheme penalises working mothers, as only those in receipt of social welfare or family income supplement are entitled to funding. If anything Fianna Fáil, is now encouraging them to go on social welfare."

Funding for rural roads has also been cut. Promises of funding for rural roads undoubtedly contributed to the election of many FF rural TDs. No sooner was the election over than the promise was binned. There is silence from these TDs.

So its hairshirt time once more for an electorate that has given FF a new mandate. On this occasion FF TDs are unlikely to rock the boat. We will have the ritual expressions of concern about cut backs from FF backbenchers. This type of posturing has traditionally served them well when they act simultaneously as Government and Opposition. Vote in the Dail for cutbacks and oppose them locally in the constituencies.

Prior to the election public expenditure escalated out of control as the Government sought a new mandate. It was party time. Now the hangover has set in. The Irish economy resembles a drug addict waiting for the next fix. Unfortunately it is a time for cold turkey .