EXTRA TAXES and levies increased the amount of cash flowing into State coffers by €2 billion to €26.7 billion in the first 10 months of the year, but the figure was still short of budget targets, the latest exchequer returns show.

Monthly exchequer returns released yesterday show the State’s income to the end of October was €28.9 billion, ahead of the €27.3 billion it recorded for the same 10-month period last year.

The Government collected €26.7 billion in taxes, a €2 billion or 8.3 per cent increase on the €24.7 billion it collected during the same period in 2010. The remaining €2.2 billion was non-tax revenue. A Department of Finance statement pointed out that the increase in taxes was partly due to a 22 per cent boost in income tax to €10.5 billion, which was the result of extra taxes introduced in budget 2011, such as the universal social charge.

Stamp duty was up 52 per cent at €1.2 billion, primarily as a result of the pension levy introduced earlier this year by the Government to pay for its job creation scheme. Last December’s budget did not anticipate this measure.

The department said tax revenues were €184 million below target, a deterioration on the position at the end of September, when they were €160 million behind. Its statement added that income tax is €125 million short of budget projections.

“Given the very large year-on-year increase projected at budget time, owing to the introduction of the universal social charge and other significant revenue-raising measures, this can be viewed as a good performance,” the department argued. Vat was €383 million short of its target, which a number of commentators said yesterday was evidence of continuing weakness in consumer demand and the domestic economy.

The Government’s deficit, the shortfall between income and spending, was up 50 per cent at €22.2 billion from €14.4 billion.

This was mainly down to the €7.5 billion bank recapitalisation payment made in July and the €3.1 billion in promissory notes given to Anglo Irish Bank, Irish Nationwide and the EBS.

“Excluding these payments and the €1 billion in capital receipts from the sale of the part of the State’s shareholding in Bank of Ireland, the exchequer deficit fell by over €1.8 billion compared to the same period in 2010,” the department said.

Government spending was €34.5 billion, 2.8 per cent more than the €33.6 billion it spent in the first 10 months of last year.

The shortfall in the Government’s current account, the difference between its day-to-day spending and tax income, was €10.7 billion. The capital account deficit, which includes capital spending by individual departments and items such as the bank recapitalisation, was €11.5 billion.

Alan McQuaid, economist with Bloxham stockbrokers, said the overall figures were disappointing with weakness in domestic demand and the world economy hitting receipts.

Mr McQuaid said the Government needed a turnaround in domestic private demand if the economy was to reach the growth rates needed to make inroads into the State’s debts.

“As such, we don’t think the Minister for Finance should, in budget 2012, do any more than the €3.6 billion in austerity measures outlined in the EU/IMF bailout,” he warned.

Peter Vale, a partner with accountancy firm Grant Thornton, said the figures indicated people were spending less and saving more. “The continuing shortfalls in Vat are a reflection of weaker spending power. The Government will have limited scope to raise income tax in the December budget without further weakening domestic demand,” he said.

“We have possibly reached the stage where additional tax revenues should be raised through non-consumption related taxes, such as property taxation.”