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Half-year exch figures confirm economic gloom

Issued : Thursday 2 July, 2009

Today’s exchequer figures showing a Government deficit of €14.7bn for the first half of the year, together with yesterday’s record unemployment figures of nearly 420,000, confirm the depth of the country’s economic crisis. Fianna Fail must confront the jobs crisis

These figures highlight what families around the country, facing unemployment, reduced incomes and higher taxes, brought about by Government mis-management, are experiencing on a daily basis.

This week alone the Quarterly National Accounts showed the economy declining at a record pace in the first three months of the year, with consumer spending down 9.1% as the extra levies and tax hikes take their toll on household budgets. This week’s indicators follow hot on the heels of the IMF and OECD’s forecast that the economy is set to fall up to 14% from its 2007 peak.

No amount of bluster by Taoiseach Brian Cowen that things are “getting worse more slowly” can hide the fact that these figures are very bad.

Under every tax heading Government revenue is well below what it took in last year. Stamp duty and Capital Gains Tax are particularly badly hit, with receipts less than half of even the 2008 receipts under these headings. For every euro of tax revenue in the first half of 2008, the state is only taking in 83 cents this year.

When the Income Tax Levies and the Pension Levy for Public Sector workers are factored in Income Tax receipts are quite disappointing

These Exchequer figures are further inflated by additional Tax revenues from Budget changes that are once-off and amount to book-keeping exercises that bring forward revenue.

In particular, Corporation tax receipts look strong, being €118m (6.7%) ahead of expectations, but it must be remembered that the budget day change to the preliminary tax regime should mean payments of close to €1,300m would be due in the month of June*, but the target was set artificially low at €750m. The impact of this change is acknowledged by the Government.

The Government claims that the half year exchequer figures are only slightly behind target, but it must be remembered that the tax target of €34.4bn is already 15% down on the disastrous 2008 return and a whopping 27% off the 2007 peak. Tax revenue looks set to fall below 20% of GDP this year, one of the lowest rates in the world.

* Companies with a 31st December year-end must pay 45% of the 2009 liability this month. In November 2008, these companies paid €2,453M (as 90% of their 2008 liability)