Lenihan ready to wield the axe in ruthless Budget
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The October Budget is set to be the most ruthless and difficult in recent history.
THE exchequer is in much deeper trouble than Taoiseach Brian Cowen had warned during his budget cuts in the summer.
As a result, the October 14 Budget is set to be the most ruthless and difficult made by any finance minister in recent history.
Government borrowing now looks set to come in at almost twice the limit established under EU guidelines, as Minister for Finance Brian Lenihan orders his ministerial colleagues to wield the axe once again.
Deficit
The exchequer deficit has now reached €9.4bn while the amount of tax collected by the Government is now almost €3.6bn or 11.2pc behind projections made at the start of the year.
The deficit is three times the size of the deficit this time last year.
This leaves the Government with an estimated borrowing requirement of €11.5bn -- about 5.5pc of gross domestic product.
In the first nine months of the year, capital gains tax brought in €694m compared to a projected €1.16bn and the take from stamp duties was €1.36bn, below the forecasted €2.01bn.
Income tax receipts are holding up well so far, but still running below the €8.96bn target.
On the spending side, the Government is now predicting an overrun of some €600m by the end of the year.
The minister for finance warned that "difficult decisions" will need to be taken and that the Budget will be framed accordingly.
In a statement, Mr Lenihan said: "The sharp deterioration in economic growth that we have seen reflects the more challenging international conditions as well as the substantial correction in the property market that we are experiencing."
Weakness
He said this was obviously affecting tax revenues and that over the summer months the weakness in receipts had "continued at a pace".
"In particular, the performance of VAT, capital gains tax and stamp duty receipts is disappointing and reflects developments in the property market as well as weaker economic activity. As a result of these trends a shortfall of the order of E6.5bn on tax revenue is currently estimated."
- Caroline Crawford
