03 October 2008

Big Words, long Meetings, no Money

The deepening recession in Ireland and the collapse of the property market after a long and artificially hyped-up boom has led to a further sharp decline in the government's finances.

Days after the State stepped in to protect the country's banks, Exchequer figures show a serious deficit of € 9.4 billion for the first nine months of this year, to the end of September. This compares to a deficit of 'only' € 3.1 billion at the same point last year.
Total tax revenue of 2008 to the end of September was 11.2% behind expectations at € 29 billion.

The government says that the performances of VAT, Capital Gains Tax and Stamp Duty receipts are "disappointing" and reflect developments in the property market as well as weaker economic activity.
  • VAT receipts are 6.6% lower than they were at the same time last year at € 10.9 billion.
  • Capital Gains Tax receipts are 41.93% lower than they were this time last year at just over € 693 million.
  • Stamp Duty receipts are 45.8% lower than figures for last September at € 1.35 billion.
Tax revenue for the whole year is expected to be € 6.5 billion less than expected, and it is estimated that the government will have to borrow about € 11.5 billion to pay its bills.

The Minister for Finance, Brian Lenihan (right), said the slump in the government finances was "a very serious matter". You can bet it is!

Speaking on RTÉ News, Lenihan said that budget discussions were ongoing, but the State was facing what he called "tough decisions".

Separately the Taoiseach said that this was "a defining moment in our nation's history".

"We are in extraordinary economic circumstances, and if the right choices are not made, it would have catastrophic consequences for our future prospects," he added gloomily.

Brian Cowen (left) stated that "no one should harbour any illusions that living within our means would be easy in the circumstance in which we now find ourselves", but promised that his government would "not be found wanting in making the necessary hard decisions".

Meanwhile the latest report on the economy from the Irish Central Bank predicts that our economy "will shrink this year and next year". The report cites the continuing housing slump and financial market turbulence.

The bank also warns against "measures designed to prop up the property market", saying there are already "considerable tax supports and incentives by international standards".

Meanwhile, a special pre-budget Cabinet meeting, which had been due to be held on Sunday, is to be brought forward to tomorrow (Saturday) instead. There was also a special Cabinet meeting yesterday evening in the wake of the latest Exchequer figures.

The question is if all those hastily scheduled and nervous meetings will eventually produce some results that make a difference to the country and to the Irish people. So far all we hear are big words, we are told of long meetings, and that there is no money...

The Emerald Islander

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