Irish Tax Collection Slump Leads To Spending Warning

by Jason Gorringe, Tax-News.com, London

04 July 2002

The Irish Excequer has ordered a squeeze on spending as a result of falling tax collection, according to recent reports.

The Irish Independent revealed this week that Exchequer Returns showed a likely 500 million euro shortfall for the year. This means that Finance Minister, Charlie McCreevy could be heading for his first deficit in five years, despite having made 'raids' on Central Bank profits and the Social Insurance Fund in order to shore up the Irish economy.

Although acknowledging that at 1.1 billion euros, the bill for the forthcoming benchmarking of public sector wages would be a 'large bill', the newspaper reported that Mr McCreevy refused to be drawn on whether tax increases would be necessary to finance the pay increases, despite having said in the past that he would be prepared to hike taxes if 'the long-term sustainability of public services' depended on it.

According to the Exchequer figures, income taxes are more than 13% down on this time last year, corporate taxes are expected to bring in less revenue than anticipated, and VAT collection is likely to only just meet its target.

However, excise duty collection is ahead of target, the Irish Independent reported.

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