THE LATEST exchequer figures show a deficit of €7.3 billion for the first four months of the year but the tax take is in line with the forecast made in last month’s Budget. There is cautious optimism in Government that the bottom has been reached in terms of plummeting tax revenues and that the projected yield of €34 billion for the year will be reached.
Total tax receipts are down almost 24 per cent from last year but the drop in income tax is just 6 per cent. Stamp duty is down by a massive 64 per cent, while VAT receipts are down 21 per cent. The yield from income tax, VAT and excise are all in line with the profile set by the Department of Finance last month. The total tax take for the first four months was €11.6 billion, while Government spending in the same period was almost €19 billion.
Fine Gael finance spokesman Richard Bruton said the figures showed tax receipts were deteriorating at an accelerating rate and suggested that the economy was teetering on the precipice of a potentially fatal deflationary spiral. “The data confirms Fine Gael’s belief that we cannot chase the Irish economy down with more and more tax increases, and through deep cuts in investment, which destroy jobs and undermine the potential of the economy to grow out of recession,” he said.
Mr Bruton added that a worker on the average wage now faced a marginal tax rate of 51 per cent: “This is hardly the incentive needed for the type of entrepreneurship and additional effort that we need to pull the Irish economy out of recession.”
Labour Party finance spokeswoman Joan Burton said last month’s Budget had slashed incomes, sapped consumer confidence and hit spending and the knock-on effects would be seen for the rest of the year. “Under every tax heading, Government revenue is well below what it took in last year. For every euro of tax revenue in the first four months of 2008, the State is only taking in 76 cent this year. 2008 was already a disastrous year so the latest news heaps yet more misery on an increasingly shaky Government,” she said.