Together with recent national accounts data, the publication yesterday of exchequer returns for the first quarter of this year adds to the sense that the Government is in a hole of its own making.
To be sure, revenue growth remains positive when compared to the same January to March period of 2006. But for perhaps the first time since 2002, growth in tax revenues is in line with the Department of Finance's monthly estimates. Put simply, successive years of tax buoyancy appear to have come to an end. And given the very conservative nature of the Department's projections, it will be hard for the Government to draw much comfort from the figures.
The most worrying aspect of recent exchequer returns is this: in January only three categories were underperforming compared to forecasts - income taxes, customs duties and capital acquisition taxes. For the period January to March the situation is reversed in that only two categories are now growing by more than expected. The fact that total tax revenues are growing by 10 per cent - almost exactly as forecast - is due to the modest buoyancy that remains in stamp duty receipts. But that is fast disappearing. Compared to the rampant growth of 36 per cent in stamp duty revenue in 2006, this category grew by only 13 per cent in the first quarter.
The present state of the property market suggests that this marked rate of slowdown is likely to continue. And if figures for April bear this out, both Fianna Fáil and the Progressive Democrats may have to revisit the extent of the tax reform promises they have made to the electorate.
If they have to do so, they can ponder how these events have unfolded. However unwittingly, newly elected PD leader Michael McDowell raised public expectations last September that stamp duty would be reformed, causing a slowdown in house buying and a fall in house prices. With no signs of these trends abating, it is almost certain that yesterday's returns reflect only the beginning of the knock-on effect on stamp duty receipts. And with recent economic statistics showing the first annual decline in house building on record, slower revenue growth is likely to continue to spread to other tax categories.
Questions abound. How was the economy permitted to develop its now notorious dependence on the property market? What steps were taken to moderate the extraordinary explosion in credit in recent years that has left the public finances at the mercy of the most volatile and unpredictable sector of the economy? How can the economy be put on a more broadly based and less vulnerable footing? And most of all - if these tax trends continue - what will this do to the viability of the various promises for tax reform put before the electorate, the most generous of which were proposed by the two parties that form the present coalition?
Whether the Government changes stamp duty has yet to be determined. But if yesterday's trends continue, stamp duty could play a part in changing the Government.