THE GOVERNMENT last night invited the Opposition to make detailed submissions on what should be contained in the emergency budget promised in the Dáil by Taoiseach Brian Cowen for the end of this month.
The Taoiseach’s acceptance of the need for a new budget to raise extra taxes followed the publication yesterday of disastrous exchequer figures which show tax revenue has slumped back to 2004 levels.
Mr Cowen revealed the exchequer figures for the first two months of the year were so bad that “a combination of revenue raising and expenditure adjustments” would have to be made by the Government before the end of the month.
The Government signalled it will be seeking to reduce current spending this year by an extra €2.5 billion to €3 billion. This would be in addition to the €2 billion in cuts already in train.
Minister for Finance Brian Lenihan told the Dáil the State faced “a moment of national crisis” and he invited the Opposition to play a constructive role by submitting their suggestions for dealing with the situation to the Department of Finance.
He offered briefings on the public finances to the Opposition so they could make detailed submissions, costed by Department of Finance officials.
“It is time we got real in this country,” said Mr Lenihan, who added he wanted to lay to rest the suggestion that the Government was not prepared to listen to the Opposition. “We do and I do,” he said.
Fine Gael deputy leader and finance spokesman Richard Bruton and Labour Party finance spokeswoman Joan Burton have been invited to a briefing on the exchequer figures this morning by officials in the Department of Finance.
Mr Cowen’s budget announcement came after he disclosed the exchequer returns for the first two months indicated tax revenue for the year will fall short of the €37 billion anticipated by the Government at the beginning of January.
“It seems there could be a shortfall in revenues of between €2.5 billion and €3 billion based on the figures if the profile were to continue for the remainder of the year,” he told the Dáil. He said the Cabinet had decided yesterday it would make decisions on how to respond at its meeting at the end of March and that whatever legislative arrangements needed to be made beyond that date would then be put in place.
The Taoiseach added adjustments would be made to ensure the deficit at the end of the year was 9.5 per cent of gross domestic product, as outlined to the European Commission in January. “It is important that this be done. I cannot anticipate the decision, but in my view it will require a combination of revenue raising and expenditure adjustments,” said Mr Cowen.
Fine Gael leader Enda Kenny last night gave a guarded welcome to the announcement by the Taoiseach that the Government would bring forward a plan to deal with the worsening situation by the end of the month.“While we still have to see the detail on what the Government are going to deliver, I offer a guarded welcome for the decision, belated as it is, by Brian Cowen to accept my call for a new budget,” he said.
Labour deputy leader Joan Burton said the exchequer figures showed the Government’s strategy of trimming expenditure last July and bringing the budget forward to October had been completely inadequate to deal with the financial difficulties face by the country.
“The figures confirm again the Government’s miserable failure in stabilising our finances, having now tried on several different occasions,” she said.
The figures show that the amount of tax collected in the first two months of the year was down almost 24 per cent on the figure collected in the same period last year.
The biggest falls in revenue came from the property-related capital gains tax and stamp duty.
More significantly, corporation tax and VAT were also down substantially. Income tax receipts were also down, despite the 1 per cent levy, while social welfare spending is up due to the rapidly increasing numbers out of work.
The latest unemployment figures due out today are expected to show another massive jump, from 326,000 on the Live Register in January to about 350,000 in February.
