The government received total tax receipts of EUR31.4bn in the ten months to the end of October, compared to the EUR35.7bn that it collected in the same period last year. Reduced spending by Irish consumers and the housing market slump are being blamed as the main reasons for the 12% tax shortfall. Prime Minster Brian Cowen has warned that expenditure would face further cuts and it has been projected that the year's budget deficit could grow to as much as EUR6.5bn.

The Finance Department has revealed VAT and excise duties ended EUR2bn under estimates for the first ten months of the year. Corporation tax receipts also fell short, by EUR560m.

Ireland’s struggling housing sector continues to contribute much to the shortfall, with capital gains tax revenue down by EUR596m compared to last year, and stamp duty receipts almost halving to EUR858m.

The only area that experienced an increased tax-take was revenue received from petrol and tobacco.

Richard Bruton, Finance Spokesman for the opposition Fine Gael party accused the government of creating the "worst deterioration in the public finances in the history of the state."

Bruton believes that the government will have to raise another EUR5bn in extra taxation and cut public spending further to bring the public finances back onto an even keel.

Cowen has so far ruled out an increase in corporation tax, but increases in other taxes may be unavoidable.