TAX REVENUES continued to fall in the year to September but at a slower rate than previously, according to new figures published yesterday.
Separately, the Central Bank now believes the economic recovery will be weaker in 2010 and 2011 than it forecast three months ago. The bank called again for a larger adjustment than originally planned in the forthcoming budget.
Asked about the budget yesterday, Minister for Children Barry Andrews raised the prospect of changes in child benefit for high earners. He said it was very hard to justify a situation where high earners are receiving child benefit on the basis of tax paid by people on much lower incomes.
The Central Bank believes that exports will be stronger than anticipated this year and next, but that weakness in the domestic economy will more than offset these gains.
Despite the slightly weaker overall outlook, the bank has not changed its forecast for unemployment. It expects the rate of joblessness to decline slightly in 2011, to average 13.3 per cent over the year (it stood at 13.7 per cent last month).
Total tax revenues were down 6.5 per cent in the first nine months on the same period in 2009, but the rate of deceleration is easing.
In the third quarter of the year (July-September), tax revenues were 2 per cent down on the same period in 2009.
In the short term, Ireland’s position on international financial markets improved yesterday, for the third consecutive day.
The interest rates on the most closely watched Irish government bond fell below 6.3 per cent.
Ireland was helped by a wider calm in international markets and reports that the European Central Bank had greatly increased its intervention in the market last week. Such intervention is designed to push down interest rates on weaker countries’ debt.
Less welcome are three separate reports on the property market published this morning, which show that residential house prices continue to slide across the State.
Websites Myhome.ie and Daft.ie and property group Sherry FitzGerald have all published their latest analyses of house prices for the third quarter.
All three reports show the same broad trends, pointing to continued declines in price.
According to Myhome.ie, a property website owned by The Irish Times, prices nationally fell by 3.9 per cent in the third quarter.
The latest fall brings the total decline from the peak of the market in late 2006 to almost 32.4 per cent, according to Myhome.ie.
Daft.ie says prices fell by slightly less – 3.7 per cent – in the third quarter of the year on the previous quarter. It says prices nationally are now 37 per cent down from the peak recorded in 2007.
Speaking in Brussels yesterday, before the exchequer figures were released, Taoiseach Brian Cowen was unconcerned by the downward revision in the Central Bank’s economic forecast, saying it was “in line with Department of Finance budgetary forecasts last December”.
Labour’s finance spokeswoman Joan Burton said the figures confirmed “yet again” that, unless the Government could get people back to work and retain existing jobs, income tax and value added tax would keep contracting.
Fine Gael finance spokesman Michael Noonan said, “The huge sacrifices made by the Irish people to get to this point would now be helping to restore confidence and growth to the economy – were it not for the Government’s catastrophic management of the banking sector.”