Tax take to be €2 billion behind target

Department of Finance figures show that the Exchequer deficit was €22.7 billion in the first ten months of the year. The figures also showed that just over €26 billion in tax was taken in in the period, just over €1 billion below estimates made in the April Budget.

The figures were released as Minister for Finance Brian Lenihan told the Dáil that forecasts show the overall tax take this year is back at 2003 levels.

Minister Lenihan said total tax revenues were forecast to finish in the region of €32 billion, compared with the €34.3 billion forecast in the April Budget. He also said the Government would have to borrow €22 billion this year to fund services.

Asked by Labour's Joan Burton why the tax take would fall €2 billion short of his predictions last April, the Minister said that due to wage reductions, half of all income earners were now out of the tax net. He also said the percentage paying tax at the top rate is down from 21% to 10%.

The Minister also said that unemployment figures for the end of October would show that there was no increase in the Live Register, and he did not accept that unemployment would grow to 500,000.

The Exchequer deficit has been swollen by the €4 billion paid to Anglo Irish Bank to save it from going under and the €1.7 billion that has been pumped into the National Pension Reserves Fund.

A breakdown of the tax figures showed that total receipts are 17% lower than in the same period last year.

Capital gains tax is running more than 22% behind the April targets at €235m, while income tax and VAT are both almost 6.5%, or more than €600m each, behind projections. €9.2 billion of income tax was taken in the ten months, while the VAT figure was €8.95 billion. Stamp duties are 5.7% behind target at €729m, but corporation tax is running almost 10% ahead of expectations at €2.8 billion.

Total spending of €38.8 billion is running 1.4% or €567m below the April Budget projection, despite a 15% increase in social welfare spending from last year as unemployment rises.

The figures also show that interest payments on the national debt rose from €1.7 billion in the period to October last year to €2.6 billion in the first ten months of this year.