Exchequer deficit hits €7.3bn as tax take falls

The exchequer deficit widened to €7.3 billion in April after another poor month for tax revenues, according to figures published this afternoon by the Department of Finance.

Tax revenues collected in the first four months of 2009 came in almost 24 per cent lower on the same period last year and total spending increased 3 per cent.

Capital spending by the Government in the year to date has fallen 14.4 per cent to €1.85 billion, according to the public finances data, but current expenditure increased 4.5 per cent.

The Government collected €10.1 billion in tax receipts in January-April compared to €13.3 billion in the first four months of 2008.

The figures show that April was another bad month for tax revenues, with revenues from all categories of tax remaining substantially in decline.

Although the pace of decline in tax revenues worsened only marginally, there were few bright spots in the data.

Declines in consumer spending led to a 21 per cent fall in VAT receipts, which are now running more than ¤1 billion lower than last year.

In percentage terms, the housing and investment-related taxes continue to suffer the most, with capital gains tax down 69 per cent or €405 million on last year and stamp duty receipts coming in 64 per cent or €433 million lower.

Excise duties are almost 30 per cent or €562 million behind 2008's yield, while corporation tax is running 45 per cent or €443 million behind 2008's yield.

Income tax has slipped 6 per cent behind 2008 with receipts €243 million lower despite the additional yield from the income tax levy announced in the October 2008 budget.

Davy Research economist Rossa White said income tax receipts had "held up quite well" and said this may indicate some early payment of self-assessment income tax ahead of the April budget.

The impact of the increased levies in April's supplementary budget will be reflected from the May public finances onwards.

However, Mr White said it was "disappointingly short-sighted" on the part of the Government to slash capital spending while not properly tackling current spending.

Fine Gael finance spokesman Richard Bruton said the Irish economy was now "teetering on the precipice of a potentially fatal deflationary spiral".

Labour Party finance spokeswoman Joan Burton said the €7.3 billion deficit continued the trend of "appalling economic news" with the data heaping "yet more misery on an increasingly shaky Government".

Ms Burton said job losses were the key to the loss of public revenue: "If these figures are to be improved there has to be a sustained effort to protect and retain jobs and to encourage job creation," she said.

"There can be no return to sound public finances till this jobs crisis is overcome."