Cowen Unveils Exchequer Return Figures For Q1 2008

by Jason Gorringe, Tax-News.com, London

08 April 2008

Irish Minister for Finance Brian Cowen has announced this week that an Exchequer deficit of EUR354mn was recorded in the first quarter of 2008.

At the end of March, tax revenue was EUR600mn, or 5.1% behind the published profile. Expenditure was broadly in line with target, at EUR66mn or 0.6% under profile.

Commenting on the results for the first quarter, Cowen noted that:

“Since the early part of this year, some of the international risks identified at Budget time have materialised, specifically in relation to the weaker international economic environment, developments in oil prices and the movements in the dollar and sterling exchange rates."

He continued: "In this context, the performance of income tax which is up 5% year-on-year is welcome as an indicator of the resilience of the Irish economy."

"Overall tax receipts were EUR600m, or 5.1% behind target in the first three months of 2008. Over half of this shortfall is due to the poor performance of Capital Gains Tax which reflects the more adverse conditions in equity and property markets. The next key payment date for CGT is at the end of October."

"At this stage it is not expected that this tax shortfall, particularly in CGT, will be recouped later in the year. It is important to point out that I believe that the current situation is manageable given the strong position of the public finances such as our low debt to GDP ratio. My Department will continue to closely monitor overall tax performance over the coming months as a clearer trend emerges."

Mr Cowen further stated that:

"Investment in key capital expenditure is slightly ahead of profile for the first quarter, due mainly to better than anticipated progress on a range of capital spending projects, arising under the National Development Plan."

"For example, the N11 Kilpedder-Delgany Interchange was opened on time and within budget; 40 new intercity rail cars were delivered in this quarter, bringing the total already delivered to date under the NDP to 112. A new Community Nursing Unit in the Phoenix Park, providing 100 beds for older people, was also completed in the first quarter. This is real evidence of this Government’s commitment to continued investment in our economic and social development."

He concluded: "It is crucial that the agreed budget spending limits are adhered to this year. As I indicated at Budget time the rate of increase in current spending over the medium term must be managed carefully and kept within available resources. I intend to do this."

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