A slump in consumer spending and the struggling property market led to a further deterioration in public finances last month, as the Government’s tax receipts slipped further behind target.
The Government's intake of tax in July was €776 million below what it expected for the month, with a shortfall in VAT receipts accounting for €450 million of the overall monthly deficit.
Economists today described the figures as "disappointing", while Fine Gael TD Olivia Mitchell said they pointed to a "deep and broad recession".
For the first seven months of the year, the collected tax revenue of €22.6 billion is 8.9 per cent lower than what the Department of Finance estimated it would be in January.
Stamp duty receipts for the year so far arrive at €1.14 billion - 22.5 per cent lower than had been forecast as the housing downturn proved more pronounced than expected. Capital gains tax is 38 per cent below forecasts for the year at €655 billion.
Stamp duty receipts have been falling short of expectations for more than a year, while capital gains tax started to slip behind forecasts in early 2008.
But the sharp fall in VAT in July suggests a widespread slowdown in consumer spending. VAT receipts for the year are 10.6 per cent below the Department of Finance's monthly profile at €8.9 billion.
There has been an average monthly shortfall of €318 million in tax revenue in 2008, Ulster Bank economist Pat McArdle said.
Ms Mitchell said the figures revealed "the worst deterioration of the public finances in history."
She accused the Government of being "deluded" and accused Minister for Finance Brian Lenihan of having "no understanding of the scale of the crisis".
The Labour Party's Seanad finance spokesman Senator Alan Kelly called on the Government to make restoring public confidence and economic management a priority.
"However, at a time when strong and decisive leadership is required, the Taoiseach and those around him seem paralysed in the face of the economic problems now swamping them," he said.