THE GOVERNMENT has insisted this year’s budget targets and the terms of the EU-IMF bailout will be met despite official figures showing a tax shortfall for 2011.
Minister for Finance Michael Noonan said last night the exchequer returns for 2011 showed the public finances were returning to a more sustainable path.
The figures published yesterday showed that tax revenues for 2011 were €873 million below expectations set a year ago but slightly higher than the estimate made in last month’s budget.
Tax revenue for the year was just over €34 billion. That compares to €47 billion in 2007 at the height of the boom.
Representatives of the EU-IMF-ECB troika are due to visit Ireland again next week to review the progress of the bailout programme.
The exchequer returns show the target agreed with the troika of reducing the underlying budget deficit to 10.1 per cent of gross domestic product (GDP) for the year has been met comfortably.
The final deficit figure for the year will come out at about 9.8 per cent, according to Michael McGrath, assistant secretary at the Department of Finance.
Under the terms of the EU-IMF programme, the deficit has been set at 8.6 per cent of GDP for this year and Mr McGrath said that was “an achievable target”. He said that while tax revenues for 2011 were a little below target based on the estimates of a year ago, they were ahead of the revised targets outlined in the December budget.
The main tax shortfalls were in VAT, which was almost €500 million below target, and income tax, which was €327 million below target.
Mr Noonan said the country was entering 2012 with its finances under control.
“This shows that we are making progress in returning our public finances to a more sustainable path. The 2011 figures are slightly ahead of estimates included in Budget 2012 and we have met our budgetary targets set as part of the EU-IMF programme for 2011,” he said.
Total exchequer spending of €45.7 billion last year represented a fall of 1.6 per cent from 2010, while capital spending fell by €1.6 billion or 27.5 per cent.
The cost of servicing the national debt last year jumped by €1.1 billion to €5.4 billion.
Minister for Public Expenditure and Reform Brendan Howlin said the figures showed spending was well within the limits set out for the year as a whole. “We have met all of the quantitative budgetary targets set as part of the EU-IMF programme and we are fully committed to continuing that trend.”
However, the Government’s approach to spending was strongly criticised by the director general of the Construction Industry Federation, Tom Parlon, who said spending on productive infrastructure had been slashed by 27.5 per cent during 2011 to protect current spending.
“Investment in the Irish economy is being scarified to fund the fiscal adjustment but day-to-day spending remains out of control. There are also serious question marks over the manner in which the public capital programme is being delivered and an urgent need for the publication of the list of projects funded this year and those planned for next year,” said Mr Parlon.