Saturday, November 7, 2009 Previous editions
Friday, July 03, 2009
THE massive cost to taxpayers of the bank bailout has sent the mid-year exchequer deficit soaring to €14.7 billion, new figures reveal.
Another worse-than-expected crash in tax take, coupled with the €6bn nationalisation of scandal-hit Anglo Irish Bank and recapitalisation of Bank of Ireland and AIB, ripped the huge black hole in the nation’s finances, which dwarfs the €5.6bn shortfall recorded 12 months ago.
Tax take was €118m below what the Finance Department predicted just nine weeks ago at the time of the crisis April budget.
Fine Gael finance spokesperson Richard Bruton warned this could mean an extra €1.5bn crash in revenue this year – pushing the full 2009 deficit to more than €25.5bn.
Labour’s finance spokesperson Joan Burton expressed alarm that revenue from the extra pension and wage levies was also below expectations, pointing to a deepening of the unemployment "crisis".
However, Finance Minister Brian Lenihan put a positive spin on the figures, claiming they were broadly in line with predictions.
"That does not mean that it is good news for the country, it means that the weather is behaving rather as predicted," he told the Irish Examiner.
The spiralling deficit creates an even gloomier backdrop for the report of An Bord Snip Nua, which is expected to go to Mr Lenihan in the next week with recommendations for €5bn worth of spending cuts – triggering a €1.5bn slashing of welfare and child benefit payments.
The deepening black hole in exchequer coffers, which could see the State borrowing more than €25bn to stay afloat this year, threatens to trigger a vicious circle as the size of the debt needed causes international money markets to downgrade Ireland’s credit worthiness further. This will push up the cost of that borrowing and provoke the need for more spending cuts.
Opposition leaders derided Government claims the situation was easing because their predictions were less off the ball than usual.
Tax revenue collapsed by another €3.3bn – 17.3% – in the first six months of the year to €15.8bn – €188m less than Mr Lenihan predicted just weeks ago.
The finance minister admitted that the tax position looked less worse than it would have otherwise because changes in Corporation Tax payments meant many more companies than usual now paid up in June, thus improving the overall take. And the Government actually under spent by €530m so far this year, including €100m less than planned on welfare.
Ms Burton added that the full cost of the bank bailout and the creation of the "bad bank" NAMA were financial unknowns which would sink the country further into financial uncertainty.
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