TAX REVENUES for the first 11 months of the year were €520 million or 1.6 per cent below target, according to figures released by the Department of Finance yesterday.

The effects on the underlying exchequer deficit were partially offset by lower than projected capital spending. But bank rescue costs caused the total exchequer deficit in the first 11 months of 2011 to soar. From €13.5 billion in the same period last year, the exchequer deficit jumped to €21.4 billion in the same period this year.

The department also published its annual pre-budget Estimates of Revenue and Expenditure. It contains projections for the more closely watched general government budget deficit.

The department has revised downwards its expectation of the general government budget deficit to 10.1 per cent of gross domestic product for 2011. Earlier in the month it was expecting a deficit of 10.3 per cent.

This measure is compiled on an accruals basis and is more comprehensive than the exchequer figures. It includes local government spending on the expenditure side and social insurance contributions on the revenue side, neither of which are included in the exchequer figures

Under the terms of the EU-IMF bailout the Government must bring the general government deficit down to 8.6 per cent in 2012.

Yesterday’s exchequer figures showed a weakening in tax revenues, which last month alone were €337 off target. Traditionally more taxes are collected in November than any other month.

Receipts for the first 11 months while lower than target are up compared to the same period last year. The increase is mostly as a result of tax rate increases introduced in the last budget and the pensions levy introduced by the new Government to finance its jobs initiative.

VAT receipts have fallen below both last year’s receipts and official projections for this year, reflecting weak consumer spending. Year-on-year VAT receipts have now fallen for six consecutive months. VAT receipts, which are the second largest source of tax revenue, stood at €9.6 billion in the first 11 months of the year.

The weakness of consumer spending is likely to make the proposed two percentage point increase in the VAT rate in the 2012 budget even more controversial.

Excise duties have performed better than VAT in 2011, but signs of weakness have emerged in recent months. A year-on-year decline in receipts in November brings to four the number of months in which a decline has been recorded since July.

Income tax, which is the largest source of tax revenue, has risen sharply compared to 2010, but receipts were €273 million below target. The total amount raised in income tax in the year to November was €12.7 billion.

The corporation tax take in the month of November stood at just over €1 billion. This is below Department of Finance projections and lower than the amount collected in November 2010.