THE SCALE of the financial and economic crisis facing the State has worsened significantly, with another unforeseen fall in tax revenues announced yesterday and a big increase in the jobless figures due to be revealed today.
The Opposition parties have described the situation as "catastrophic" and "ruinous", while Minister for Finance Brian Lenihan has promised further spending cuts in response to the latest exchequer figures. "There is now a major gap between spending levels and tax receipts," the Minister said.
The figures reveal a massive shortfall of close to €7.5 billion in the amount of tax revenue collected by the Government during the first 11 months of the year. This is far worse than was predicted as recently as the Budget in October and analysts now expect that the shortfall for the year could exceed €8 billion.
"It is essential that further measures are identified to ensure the sustainability of the public finances. My key priority is to ensure that the public finances are brought under control," Mr Lenihan said.
"Given the measures I have already taken on taxes, the remedial steps to deal with this further deterioration in the public finances will focus on reducing spending," he said.
Fine Gael's deputy leader and finance spokesman, Richard Bruton, called the figures "calamitous" and said the "rushed" Budget had made a bad situation much worse.
"The Government has no plan to get Ireland out of the mess we find ourselves in. Their rushed Budget in October was built on crumbling foundations, made bad decisions, had incomplete information, displayed no long-term strategic plan for the economy and in fact made a bad economic situation much worse."
Mr Bruton said the budget had targeted the wrong people and poured dwindling taxpayers' resources in to unreformed public administration. He added that the predicted tax take of €43 billion for next year was no longer feasible and was likely to be of the order of €38 billion.
He called for a public sector pay freeze in 2009, a reversal of the VAT increase and a windfall carbon levy.
The Labour Party finance spokeswoman, Joan Burton, said the figures showed that the Minister's Budget forecast was hopelessly optimistic. "November's ruinous exchequer figures underline again that we need a strategy to get our economy moving and get people working again. The country needs an economic stimulus package to protect and create jobs, stimulate spending and restore competitiveness," she said.
"The Government's decision to bring forward the Budget now looks increasingly short-sighted. Without knowing the November tax figures, they were effectively flying blind."
Sinn Féin's economic spokesman Arthur Morgan said the figures showed Government management of the economy had been "clueless".
Tax revenue is 16 per cent behind projections made at the start of the year. VAT has plummeted €2.1 billion below expectations, capital gains tax is down €1.7 billion and stamp duty is €1 billion short of its target.
The collapse of these revenues is the direct result of the bursting of the housing bubble, with the shortfall in VAT also reflecting a wider malaise in consumer spending as the economy sank into recession.
All tax categories are behind target. The shortfall in income tax worsened in November, suggesting that self-employed people who file their annual tax returns during the month are already feeling the pinch.
Ulster Bank economist Pat McArdle said the 2009 deficit could be as high as €16.5 billion, resulting in a General Government Deficit of 8 per cent of GDP, compared with the 6.5 per cent provided for in the Budget. "We can see now why the Government rules out participation in the EU fiscal boost scheme last week - we have already had our fiscal expansion and must contemplate cuts instead of boosts," said Mr McArdle.
The monthly unemployment figures out today are expected to show a further significant increase on last month's total of 251,951.