The Department of Finance's annual Economic Review and Outlook, published last week has revealed that the Irish government faces a tax revenue shortfall of around 500 million euros by the end of the year.
The Finance Department review explained that tax receipts were significantly affected this year by factors such as the change to the calendar tax year, and the fact that the revenue-enhancing changes introduced in the 2002 budget for corporate tax and VAT did not show any real results until May and June respectively.
The review suggested that the 8.6% predicted growth in tax receipts is now unlikely to be reached, and warned that government spending will have to be closely monitored:
'With slower economic growth...the capacity for desirable tax and spending initiatives is lower than in recent times. Expectations, whether for public service provision or tax relief, will have to accommodate this new situation,' the Department of Finance concluded last week.
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