Brian Lenihan Jnr (Dublin West, Fianna Fail)

Since budget day my Department has received the October data as regards tax revenue and expenditure, which are broadly in line with what was expected. The October Exchequer returns showed an Exchequer deficit at the end of October of just over €11 billion.

The Exchequer returns also showed that in the first ten months of the year, tax receipts fell approximately €4.3 billion short of expectations with all tax headings being behind profile. In the month of October, there was a tax shortfall on profile of €693 million. While tax receipts in October have continued the poor performance of recent months, they nonetheless are broadly in line with what was anticipated in formulating the recent budget forecast for the year as a whole. In this regard, my Department anticipates a further slippage in revenues of approximately €2.25 billion in November and December, reflecting the fact that November is a key month for tax collection. This will result in an annual shortfall of the order of €6.5 billion.

As for the forecasts for 2009, the budget was framed against the most challenging fiscal and economic position for some time. In 2008, my Department expects approximately €42.4 billion in tax revenue, followed by €42.8 billion in tax receipts in 2009. This equates to a forecast of just 1% growth in taxes after the introduction of approximately €2 billion worth of additional revenue raising measures in the budget. My Department does not believe that these forecasts are overly optimistic. In its view, they reflect the underlying poor economic conditions that obtain at present.

All forecasts, irrespective of the budgetary context, are subject to risks and are affected by developments in both the international and domestic economy. This is especially so in the current circumstances, where it is unclear to what extent the upheaval in global financial markets will have a further impact on economic activity in the world's advanced economies. In this context, macro-economic forecasts for a small globally integrated economy such as Ireland, which also is experiencing a significant housing market correction, are even more uncertain than normal. However, taking these risks on board, I believe the budget is based on a balanced set of forecasts from my Department.

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