The public finances are coming under significant pressure from sustained weakness in income tax, corporation tax and excise duties, according to official figures published yesterday, writes Una McCaffrey
The first-quarter Exchequer returns show that while the State's finances are performing broadly in line with Government targets for 2003, they have so far been supported by unexpectedly high receipts from VAT and stamp duty.
When these two sources of income - both driven largely by buoyancy in the housing market - are stripped away, the remaining picture is much less robust.
The returns, compiled by the Department of Finance, reveal that the Exchequer was in deficit by €205 million at the end of March.
The result, which falls into line with Government projections of a full-year deficit of €1.9 billion, was helped primarily by VAT receipts, which came in 21.8 per cent ahead of last year and 8 per cent above targets set by the Revenue Commissioners.
Mr Dermot Mulligan, of the budgetary and economic division of the Department of Finance, said VAT receipts had been helped by "relatively strong activity in the housing market", and the higher VAT rate introduced in December's Budget.
House purchases have also contributed to a 76 per cent annual surge in stamp duty, although increases in duty on bank cards, introduced by the Minister for Finance, Mr McCreevy, in December, also contributed to the rise. While overall tax receipts were 12 per cent higher than in the same period of 2002, most sources of tax income came in below target.
The Exchequer's corporation tax take came in 31 per cent behind target. Income tax receipts were 6 per cent below target, while, within this, PAYE income was 3 per cent lower than expectations. Receipts from excise duty were 2 per cent behind target.
Mr Mulligan attributed this to "a little less personal spending" on items such as alcohol and tobacco following price increases introduced in December.
"It's difficult to make the argument that we're living in an economy that's accelerating at this point," Mr Mulligan said.
The Exchequer figures also show that the Government has so far spent €440 million less than it projected at the start of this year, mostly because of beneficial timing factors.
Some spending problems have arisen, particularly in the Departments of Health; Social, Community and Family Affairs; and Justice.
In a statement, Mr McCreevy said he recognised spending "pressures", but emphasised his requirement that each Department and office would manage their budgets "within approved allocations" this year.
The Fine Gael finance spokesman, Mr Richard Bruton, said the returns proved "the shaky foundations" of Mr McCreevy's Budget.
Ms Joan Burton, finance spokeswoman for Labour, said the figures were "an indictment of the policy vacuum which is afflicting the Irish economy".