THE PUBLIC finances deteriorated further in October, but only slightly, according to the latest exchequer returns data from the Department of Finance.
The Government has collected tax revenues of €26 billion for the first 10 months of the year, more than €1 billion or 4 per cent lower than targets set in April.
Tax revenues are now 17.1 per cent lower for the January-October period than they were in the same period in 2008. This compares with a 16.8 per cent decline in the year to the end of September. Poor receipts from income tax were the main reason behind the deterioration.
The department’s figures show that income tax receipts slipped further behind its projections in October and are now €625 million or 6.4 per cent lower than its target for this category of tax.
“The further deterioration in tax revenue in the past month in the main reflects the fact that the returns from the self-employed were a lot lower than expected,” said Alan McQuaid, economist at stockbroking firm Bloxham.
The latest exchequer figures “continue to paint a fairly bleak picture” of the public finances, he added.
Employers’ group Ibec said the October data was “disappointing” and were a reminder of the need for urgent measures to cut public expenditure.
Spending by the Government is 1.4 per cent below its targets and 1.6 per cent below spending in the same period last year.
Day-to-day Government spending is still up 0.8 per cent on last year, due to a 15 per cent year-on-year rise in expenditure at the Department of Social and Family Affairs.
However spending by this department, which is the result of the spike in unemployment, is no longer running ahead of projections. This reflects better-than-expected unemployment data in recent months, with the number of new claimants of jobseeker’s benefit beginning to stabilise.
Overall, the exchequer deficit has reached €22.7 billion – more than double the deficit that existed at this time last year.
Labour Party finance spokeswoman Joan Burton said it would be “a monumental blunder” for Minister for Finance Brian Lenihan to continue with a budget strategy that she said had led to the “financial paralysis” evident in the exchequer returns. The economy needs “some element of stimulus”, Ms Burton said.
However, Ibec economist Fergal O’Brien called on the Government to introduce measures to control public spending.
November is a key month for receipts from income tax, VAT and corporation tax. The Government expects that further weakness in tax during the month will double the shortfall from the existing €1 billion to more than €2 billion.
The Government said last month that tax receipts for 2009 as a whole would be closer to €32 billion rather than the €34.4 billion it announced in April.
Among other categories of tax, VAT remains one of the worst performers, with returns €611 million or 6.4 per cent behind projections and down 10 per cent compared to last year. However, October is not a big month for VAT returns.
