Lower tax-take leaves little scope for budget giveaways

Donohoe will have to raise some taxes to meet Ministers’ demands for more spending

Tax receipts for the first nine months of the year are still running behind target, suggesting Minister for Finance Paschal Donohoe will have little scope for surprise giveaways in next week's budget.

Although the shortfall is small compared to overall revenues and spending, political sources in both Government and Opposition accept that Mr Donohoe will have to raise taxes in a small number of areas if he is to meet political demands for extra spending from Ministers.

As budget meetings continue in Government Buildings the latest exchequer returns published on Tuesday show that tax receipts are running slightly below expectations, as they have been for much of the year.

The Government has collected just over €35 billion in taxes so far this year, €212 million less than expected. Finance officials expect that the shortfall will be closed by the end of the year.


The below-par performance was again down to income tax, which came in 1.4 per cent or €188 million below profile.

In recent years a surge in tax revenue and a late recalculation of the available fiscal space for the budget enabled the size of the budget day package to be increased. However, Mr Donohoe has said the package will not be increased in the days before the budget.

Difficult meeting

Budget talks are continuing all week, with Mr Donohoe meeting members of the Independent Alliance and Fianna Fáil on Tuesday.The meeting with the Independents lasted for an hour and 15 minutes, and followed a difficult meeting late last week. Afterwards the Alliance confirmed it was not happy with the progress on issues it had raised in the areas of housing, health and social protection.

It said “major issues have not been resolved yet”, and Mr Donohoe had yet to offer any clarity on when they may be.

One tax expert noted on Tuesday that this time last year then minister for finance Michael Noonan had almost €500 million more available than forecast whereas Mr Donohoe has over €200 million less.

Pat Leahy

Pat Leahy

Pat Leahy is Political Editor of The Irish Times