The Exchequer deficit for 2007 is now likely to be nearly twice what the Government originally predicted due to a substantial decline in tax revenues from the property market.
Exchequer returns, released by the Department of Finance this evening, reveal tax receipts are now running at €490 million below forecasts.
Commenting on the figures, Minister for Finance Brian Cowen conceded an Exchequer deficit for 2007 of up to €1 billion now seems likely .
This is nearly double the €500 million which the department had forecast in its estimates and means the Government will have to borrow substantially more to balance the books.
The figures, for the first nine months of the year, show a €401 million shortfall in stamp duty receipts while revenue from capital gains tax was €107 million below the department's forecasts.
"While tax revenue growth surprisingly halted its downward trend in September, the latest exchequer returns provide further evidence, if we really needed it, of the slowing Irish housing market," Dermot O'Leary, chief economist with Goodbody Stockbrokers said.
Excise duties were €225 million lower than expected while VAT was €132 million under target.
These deficits were somewhat offset by better-than-expected receipts from income and corporation tax which were €56 million and €296 million ahead of what was targeted.
Mr Cowen said: "Income tax and corporation tax are performing well and when taken together with VAT and excise duty, the four main taxes, which were forecast to account for around 85 per cent of total taxes this year, are exactly on target."
"This points to a healthy economy as was portrayed by the recent strong Central Statistics Office data for the first half of the year, which showed that GDP increased by 6.7 per cent and employment rose by 3.9 per cent," he said.
Fine Gael finance spokesman Richard Bruton said Government spending was unsustainable in these conditions.
"Current spending is growing three times faster than the rate of tax growth. If this pattern continues, the end of year deficit will be substantially worse than that forecast by the Government.
He said the next Budget should mark the beginning of a strategy that ensures proper scrutiny and delivery of public spending.
"Competitiveness starts with Ministers stepping up to the plate. We have been too tolerant of an archaic system for presenting our Budget, a system no longer relevant to the challenges we face," Mr Bruton said.