Tax revenues are growing more slowly than the Government's official target for the first time in more than a decade, according to the latest Exchequer figures published by the Department of Finance.
The figures for the first quarter of the year show the economy is slowing from the record growth likely to have been set last year.
The surplus of revenue over expenditure for the first three months of the year was £1.15 billion compared with a Budget target for the year of £2.54 billion.
Day-to-day spending has not slowed and is running at over 21 per cent more than last year, while capital spending on infrastructure projects is behind target.
At the end of March tax revenues were running 9.2 per cent ahead of last year. The target for the year is for an increase of 12.5 per cent.
Dr Dan McLaughlin, chief economist at Bank of Ireland, said that to hit the target tax revenue would now need to reaccelerate. "Since 1990 we have always overshot the [full-year] target but there is no chance of that happening this year."
Department officials agreed. "We have been chastised in the past for being conservative but we may be spot on this year. The surplus forecast certainly will not be exceeded," Mr Cathal O'Loughlin, assistant secretary at the Department, said.
Tax growth is broadly in line with expectations across most heads. However, both VAT and excise duties are significantly down, pointing to falling consumer expenditure.
Excise duties are down 8.3 per cent compared with a target of a 12 per cent increase. Department officials said this could be due to foot-and-mouth restrictions. "It could be that people are quite rightly taking the warnings not to travel too much in the countryside to heart," Mr O'Loughlin said.
Excise duties on alcohol are only up about 2 or 3 per cent, well below Department expectations. Tobacco excise is holding up. The curtailing of travel and, especially, of social events may have had an impact on alcohol consumption.
Income tax and corporation tax are both quite buoyant. Income tax is up 10.1 per cent compared with a Budget target of 8.4 per cent. However, that is likely to fall back a little after the impact of last December's Budget feeds into the figures. Corporation tax is up 13.1 per cent but that is on few payments as the first few months of the year are not normally big months for corporation tax receipts.
In contrast, spending is running slightly ahead of target at 21.5 per cent compared with a revised target of 20.7 per cent for the year. This is broadly in line with expectations but does not include any outlay for foot-and-mouth disease. Garda, Defence forces and Department of Agriculture overtime has yet to be paid. In addition, compensation payments have not yet been taken into account.
On the capital spending side, only 14 per cent of the money budgeted for the year has been spent. Capital spending normally picks up in the middle of the year as large projects get under way over the summer.