Exchequer returns show tax receipts down 19%

Tax revenues have fallen 19 per cent year-on-year, with Exchequer returns for January published this afternoon revealing that the drop in tax receipts continues to accelerate.

Tax receipts worth €3.7 billion were collected in January 2009, down €900 million on the €4.6 billion in the same month in 2008.

The property-related taxes of capital gains tax (CGT) and stamp duty show the most dramatic falls, with CGT and stamp duty receipts both down 72 per cent on the previous January.

As the employment market shrinks, the value of income tax collected is also suffering, with January income tax receipts of €1.16 billion down 3.6 per cent on the same month last year. All categories of tax are now yielding lower receipts, with VAT down almost 16 per cent and corporation tax 38 per cent lower than January 2008.

The Department of Finance estimated last October that it would collect €41.2 billion in tax revenues this year. However, that number has had to be revised as the economy has continued to deteriorate since then.

A spokesman for the Department of Finance said the January tax take was around 10 per cent of its overall target for the tax take for the year, which is in line for what would be expected for the month of January in any given year.

This would suggest the Exchequer is hoping to receive €37 billion in tax revenues this year. Official profiles for the month-by-month target yields from each category of tax have not yet been announced for 2009, but the spokesman said they would published in the next fortnight.

Profiles for month-by-month public expenditure will be published next month.

The later than usual publication of these profiles is to allow Department of Finance officials to include revised tax revenue forecasts and the €2 billion spending cuts announced by the Taoiseach today in their calculations.

Some €41.6 billion in tax was collected last year, a number was already down 13 per cent on 2007's receipts, which arrived at €47.8 billion.

The Exchequer data registers the €6 billion in borrowings raised through a five-year Government bond earlier this month.

The budget deficit of €747 million for the first month of the year is expected to worsen substantially as the year progresses, with the Government expected to have to borrow at least €20 billion this year to cover the cost of running the State.

"The public finances were already in a pretty bad position heading into 2009, and the Exchequer figures for January will do little to lift the spirits of the Government," Alan McQuaid, economist at stockbrokers Bloxham said today.

Ireland will record the highest budget deficit in the European Union as a percentage of its gross domestic product (GDP), according to a report published last week by credit ratings agency Fitch.