Tax revenues are "under pressure," the Government admitted this afternoon, as it published what it said were "disappointing" Exchequer returns data showing a further deterioration in the economy.
The amount of tax collected by the Government in the first two months of the year was down almost 24 per cent on the sum collected in the same period last year.
This means the drop in tax receipts is accelerating. In January, the decline in tax revenues was falling at a rate of 19 per cent.
The worsening picture for public finances has prompted the Government to announce an emergency mini-Budget, which will be held at the end of this month.
In the first two months of the year, the Exchequer posted an overall budget deficit of more than €2 billion compared to a deficit of just €125 million for January-February 2008.
Tax receipts worth €5.7 billion have been collected to date this year, down €1.8 billion on the €7.5 billion collected in the same period in 2008. Tax revenues are now back to almost 2004 levels.
The property-related taxes of capital gains tax (CGT) and stamp duty show the most dramatic falls, with CGT receipts declining 73 per cent and stamp duty receipts down 59 per cent year-on-year.
Corporation tax has fallen 37 per cent, while VAT, a category of tax that is driven by both the housing market and consumer spending in general, is down almost 17 per cent.
Income tax receipts, which remained resilient last year, are now beginning to crumble under the weight of falling employment. Despite the additional revenue from the income tax levy, total income tax receipts are down 7.4 per cent on last year.
Meanwhile, social welfare spending is running 8 per cent ahead of last year, partly as a result of swelling numbers of unemployment benefit claimants.
In a statement, the Government said it remained "vigilant" and was committed to restoring public finances to a sustainable position.
"This Government will take the necessary action to ensure that the General Government Deficit does not worsen from the forecast 9.5 per cent of GDP," it said.
"The budgetary position facing us is very challenging and requires that we all play our part in dealing with this unprecedented economic downturn. The fiscal strategy we adopt now is of fundamental importance to the future of this country," it continued.
"The Government will take the decisions that are necessary to ensure the stabilisation and sustainability of the public finances, which is an essential pre-requisite to the renewal of the economy."
The latest Reuters poll of Irish economists, released before the publication of the February public finances data, indicates that economists expect the General Government Deficit to rise to 11 per cent of GDP this year, the highest in the euro zone, and more than three and a half times the 3 per cent EU limit.
The European Commission has initiated disciplinary procedures against Ireland, as well as five other EU countries, for running excessive public deficits.
"Quite simply things are going from bad to worse," said economist Alan McQuaid from stockbrokers Bloxham.
"The public finances were already in a pretty bad position heading into 2009, and these latest Exchequer figures will do little to lift the spirits of the Government," he said.
"The bottom line is that the medicine that needs to be dished out will be pretty severe," Mr McQuaid added, predicting that the mini-Budget measures would focus on tax hikes rather than spending cuts.
Ulster Bank economist Pat McArdle said he now estimated that tax revenues for 2009 would come in at €34 billion, undershooting the Department of Finance's latest estimate by €3 billion.
