The Government is confident it will meet its revenue and spending targets for 2002 despite a slight shortfall in tax revenue in the first quarter exchequer returns published today.
Government spending in the first quarter was €5,326 million compared to €4,571 million in 2001 - an increase of 16.5 per cent on the first quarter of last year. But this rate of increase slowed from 22.2 per cent for the whole of last year.
The figures released by the Department of Finance show tax revenue fell by 2.8 per cent in the first quarter compared to the same period last year with income tax and VAT receipts falling short of forecasts. But Department officials said tax revenue should increase towards the end of the year as the expected economic recovery gathers pace.
The income tax take for the first quarter is 3.8 per cent down on last year compared to an increase of 1.1 per cent forecast in the December budget. VAT returns rose by only 3.8 per cent over the quarter compared to an expected increase of 11 per cent.
However Department of Finance officials said much of the shortfall in tax revenue can be explained by timing factors such as the rescheduling of corporation tax, a smaller budget spend and the delayed payment of VAT receipts.
Commenting on the figures the Minister for Finance Mr McCreevy said "the general expectation is that the economy is on the road to recovery and that this should be reflected in tax revenues over the remainder of the year".
But the Department said it is still struggling to explain the hole in income tax revenue which has been a feature of recent exchequer statements but some of the shortfall reflected the trough in the economic cycle reached in the last quarter of 2001.
Mr McCreevy said that the rate of annual increase in spending is moderating but this can be vary from month. "Spending plans by the Department are being moderated to ensure that these come in on target." The Minister added.