Higher Tax Receipts Reduced Exchequer Deficit, Cowen Reveals

by Jason Gorringe, Tax-News.com, London

06 January 2006

Ireland's Minister for Finance, Brian Cowen on Wednesday unveiled the state of the Exchequer's finances at the end of 2005.

He revealed that an Exchequer deficit of EUR499 million was recorded in 2005, confounding predictions made at the beginning of the year that it would be just under EUR3 billion.

Higher than expected tax receipts amounting to EUR1.75 billion and lower than expected spending have reduced the Exchequer deficit. However, public spending still remains at an all time high, up 9 per cent in 2005 over 2004, representing an additional EUR56 million or so per week.

Commenting on the results, Mr Cowen observed that:

“2005 was a good year in terms of the economy and public finances, with growth of 4 to 5 per cent and a balanced fiscal position. The big story was the increase in employment – 96,000 or 5 per cent as of Q3 2005 versus Q3 2004."

"The outlook for 2006 is encouraging as the IDA has confirmed. Jobs continue to be the priority and for that we must remain competitive in labour and other cost terms."

"Inflation is moderate at around 2½ per cent and my contribution to that was not raising indirect taxation in my first two Budgets. Tax revenues were well ahead, up 10.3 per cent versus 5.4 per cent forecast. Much of this – 80 per cent – was due to Revenue special investigations, extra stamp duty and bumper CGT. We do not expect a similar performance from these taxes in 2006."

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