Tax revenues remain well below the Budget target, although the shortfall reduced last month according to the latest Exchequer figures.
The figures indicate economic growth remains very weak, with further evidence of this coming in separate data showing 2,600 notified redundancies last month, an 11 per cent increase on July 2002.
The July Exchequer figures showed taxes were around €200 million below expectations in the first seven months, the Department of Finance estimates. This compares to a shortfall of €340 million at the end of June, with some slight pick-up evident in income tax and VAT during July.
However, the figures can be volatile from month to month and the Department is sticking to its mid-year prediction that tax revenues for the year "may be up to €500 million below the Budget projection".
The latest Department of Enterprise and Employment redundancy figures showed a jump in July for the second month in a row and the live register has also been rising steadily.
November will be a key month for the Exchequer, as the self-assessment income tax receipts are paid that month, and this, together with trends in consumer spending, will determine how far behind Budget taxes are for the year.
The July Exchequer figures showed total taxes of €17.442 billion for the first seven months. This is 2 per cent up on the same period last year, compared to a Budget forecast rise of 8 per cent for the full year. The Department estimates the shortfall to be currently around €200 million. The main weakness has been in income tax receipts, which are running 4 per cent below 2002 levels. VAT revenues are roughly on target, indicating some resilience in consumer spending, while buoyancy in the housing market has led to a jump of almost 50 per cent in stamp duty.
The figures show the economy is "at worst flat and at best edging forward", according to Mr Austin Hughes, economist at IIB Bank, who said they showed a slight pick-up in consumer spending and some improvement in income tax .
The Exchequer deficit at the end of July was €240 million, compared to a surplus of €1.78 billion at the same time last year.
The figures confirm the slowdown in Government spending, with total expenditure in the first seven months remaining €1.5 billion below target.
Spending in the politically sensitive health area at €4.5 billion was almost €150 million lower than Budget projections for the period.
Overall spending is running around 6.6 per cent up on 2002 levels, a sharp deceleration on the annual rate of increase of over 21 per cent this time last year.
All the increase is in current spending with capital, or investment, spending running some 10.5 per cent below 2002 levels at €2.136 billion for the first seven months.
The fall in investment spending was attacked as "sheer economic folly" by Mr Brendan Howlin of the Labour Party, who said it was "ignoring the very real impact which Ireland's infrastructure deficit is having on our attractiveness as a place to do business".
Fine Gael, spokesman, Mr Richard Bruton, said the figures indicated "that the Government's need to introduce stealth taxes, failure to deliver on insurance reform and infrastructure delivery means that our competitiveness is undermined and jobs are lost, spending is curtailed and the budgetary situation deteriorates".
Job loss notices increase 11% in July to 2,600: page 16
Editorial comment: page 15