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

Irish Public finances take another hit in July

Embedded from RTE.IE

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

Ireland- Live Register breaks 200,000 for first time this decade-Unemployment rate now 5.4%

The number of people signing on the dole for unemployment rose by 47,746 in the 12 months to the end of May. This is the highest level since January 1999.

New CSO figures just issued show that when adjusted for seasonal factors, the register rose to 207,300 in May. That's up 7,600 on figures for April and over 47,000 higher than May 2007. These figures indicate a massive 30% increase in one year as Ireland dips into recession. Job losses are now spread across the whole economy, not just the housing sector.
Ireland’s unemployment rate now stands at 5.4% - a half percentage point higher than at the start of the year.

The May Exchequer Return figures show that Ireland is headed for a €3 billion shortfall in taxes - on top of an already planned-for €5 billion Government deficit this year.
There has been a €10 billion reversal in our public finances. Ireland had a €2 billion surplus in 2006. Over the last two years the Government has increased its day-to-day spending by 65%. It must attempt to curb the increase in public expenditure at a time when unemployment has breached the psychologically important 200,000 barrier. It now has the worst of all worlds. Planned cuts will be painful and will trigger a backlash.


The massive increase in public expenditure contributed to the feel good factor, which helped to propel FF to election success in 2007. It is now time for retrenchment.
The 2007 General Election was the election to lose. FG and Labour politicians will thank their lucky stars.