Today's Exchequer returns reveal that current spending has been growing at two and a half times the growth in tax revenue, Fine Gael said today.
Finance spokesman Richard Bruton was speaking following the publication of the Government's financial figures for June.
He said a a €900 million surplus this time last year has been turned into a deficit of €1,400 million today.
"For years now Fianna Fáil has allowed spending grow at a pace far in excess of the growth in the economy. This approach is simply not sustainable."
Mr Bruton noted that receipts from capital gains tax (CGT) in June were less than half of what had been projected by the Department of Finance.
"Receipts from stamp duty were 25 per cent below the projection of the Department of Finance. Clearly if this pattern continues the end year deficit will be substantially worse than that forecast by Government only a few short months ago."
Mr Bruton said it was vital that the Government "urgently address" the erosion of competitiveness that Ireland is currently experiencing.
The Exchequer returns for June revealed that stamp duty receipts are some €97 million below target for the half year.
The Labour Party's finance spokeswoman Joan Burton said it is clear that the slowdown in the housing market is now feeding into Exchequer receipts
"It should be noted that the forecast for stamp duty receipts in Budget 2007, on which these profiles were based, had already built-in expectations for much lower levels of activity in 2007 over 2006," Ms Burton said.
Ms Burton said the news came following renewed debate about the "viability" of house prices, and speculation as to further falls in house prices, based on a study published with the ESRI Quarterly Economic Commentary today.
She said she had no doubt the Minister for Finance Brian Cowen had been furnished with an analysis of the housing market by his Department before he put legislation through the Dáil last week amending the stamp-duty regime for first time buyers.
"It is important that the Minster publish information to provide a background to the exchequer returns, to allow for informed commentary on the implications of the flow of stamp duty receipts over the next six months.
"Otherwise, we run the risk of having each monthly set of exchequer returns raising further doubts about the housing market, as they are compared to out-dated forecasts. It would be far better for the Minister to set out a new set of targets, in order to maintain confidence in the market."