Irish Finance Official Blames Tax Shortfall On Economic Downturn

by Jason Gorringe, Tax-News.com, London

27 January 2003

Speaking at a Public Accounts Committee meeting last week, Department of Finance secretary-general, Tom Considine argued that the 3.5 billion euro tax shortfall in Ireland over the past two years should be blamed on September 11, the ensuing economic downturn, and the foot-and-mouth crisis, rather than on miscalculations by his department.

Although tax revenues fell significantly short of predictions in 2001 and 2002 (28 billion euros collected as opposed to the 30.5 billion predicted, and 29.3 billion euros rather than 30.3 billion, respectively), Mr Considine explained that tax forecasting was not an exact science, and that shifts in economic growth are difficult to predict and account for.

'Ireland is not unusual in experiencing a significant shortfall in corporation tax in 2002. Other examples include Germany and Britain,' he told the Accounts Committee hearing.

However, according to a report from the Irish Examiner on Friday, several of the Committee members expressed grave concern at the continued inaccuracy of the government's revenue predictions.

'What confidence can the public have in this year's forecast in the budget, bearing in mind the inaccuracies in the past?' Committee chairman, John Perry asked, revealing that the forecasting system currently employed sometimes results in inaccuracies of as much as 50 million euros per week.

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