The predicted shortfall in end-of-year tax receipts could be less than expected, but a tough Budget is still on the cards, the Minister for Finance, Mr McCreevy, has said. And he said the emphasis would be on on improving Irish competitiveness.

Speaking yesterday, before addressing the Leinster Society of Chartered Accountants' October lunch in Dublin, Mr McCreevy said the fall in the amount of tax collected by the Exchequer had stopped during the third quarter.

And while he did not say that the shortfall in tax receipts for the year would be less than the €500 million his Department had forecast, the Minister said he expected a further improvement by the end of the month.

He pointed out the collection of self-employed and capital gains taxes would further boost the Exchequer at the end of October.

"The figures for the third quarter did not deteriorate any further and the overall receipts are a lot better than they were at the start of the year," he said.

Mr McCreevy would not be drawn on whether he intended to increase the level of indirect taxation in his December Budget. He said that low taxation had been a successful cornerstone of Government policy, which had ultimately yielded better receipts for the Exchequer.

"Low direct taxation means that you have to get taxes from other sources," he said. "Last year, I increased some indirect taxes, and that money goes to pay nurses, gardaí and teachers."

Mr McCreevy agreed that there were recovery signs in the global economy. However, he made it clear that he wanted to keep the national finances on a tight rein. "I am inclined to take a cautious view of growth prospects," he said.

In his speech, the Minister said the Budget would be strategic rather than reactive.

"What we must do is to ensure that Ireland is first off the blocks when the recovery happens," he said. "The key to achieving this is maintaining and improving our competitiveness."

Mr McCreevy said prudence dictated that the Government make sensible decisions and not put at risk the gains made in recent years.

He acknowledged that the past year had been difficult for the economy. But he argued that the Republic had coped with the downturn. "Today's Irish economy is robust and resilient," he said. "That resilience is particularly important in difficult times and will continue to stand us in good stead in the coming year. Resilience is, however, no excuse for complacency."

He warned that the State had to accept a new economic reality and realise that the days of double-digit growth were over.

Mr McCreevy told the gathering of accountants that the second stage of the legislation that will create the Irish Auditing and Accounting Supervisory Authority would be going before the Seanad later this week.

He said that the Companies (Auditing and Accounting) Bill, 2003, proposed far-reaching reforms of the regulatory structures governing the accountancy professions. "The Bill represents a challenge to the accountancy profession," he said. "It is one which I am confident will be embraced enthusiastically."