THE EXCHEQUER deficit of €3.7 billion for the first quarter of the year is further evidence of the weakness of the Irish economy and is unsustainable, Minister for Finance Brian Lenihan said last night.
Tax revenue was down €2.6 billion, or 23 per cent, compared with the first three months of last year, while total net voted expenditure was up by over €680 million or 6 per cent.
All areas of taxation are significantly down with the four main tax areas – VAT, income tax, corporation tax and excise duties – 18.5 per cent lower on an annual basis.
At the start of the year, the 2009 estimate for tax revenue was €37 billion but this was reduced to €34 billion at the end of February. Mr Lenihan said that figure remains his department’s current working estimate.
“The Government has already taken action to address this unsustainable position and we must recognise that the budgetary position will take a number of years to correct. Next week’s supplementary budget will take further steps to improve the immediate prospects for the public finances as well as charting a multi-annual course of correction to achieve a deficit of below 3 per cent of GDP by 2013. In doing so, I will focus on addressing the underlying deficit which is not directly related to the global business cycle,” Mr Lenihan said.
Fine Gael finance spokesman Richard Bruton said the Government clearly did not know what it was doing.
“The Government’s budget has once again fallen apart. Its plan to spend €65 billion is only supported by €34 billion in tax. The Government is travelling on a road that can only lead to ruin. No country can borrow 12.75 per cent of a rapidly shrinking income and hope to survive,” he said. “This situation is the consequence of eight years of economic mismanagement and 18 months of denial and incompetence in the face of the mounting crises,” said Mr Bruton.
Labour Party finance spokeswoman Joan Burton said the figures confirmed a disastrous first quarter.
“One of the most unfortunate consequences of the Government’s chopping and changing on the economy is that families and individuals who have suffered little or no income loss are petrified of spending,” she said.
“Unless we restore some confidence to consumers we will continue to haemorrhage retail sales, businesses and jobs,” said Ms Burton. Sinn Féin finance spokesman Arthur Morgan blamed Government “inaction”. He said the Government placed an over-emphasis on supporting the banks with little attention to jobs or support for small and medium enterprises.