Joan Burton (Dublin West, Labour)
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Question 2: To ask the Minister for Finance his views on the latest Exchequer figures; their implications on the fiscal position here moving into 2010; and if he will make a statement on the matter. [45078/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Exchequer returns for the period to the end of November, which were published yesterday, showed an Exchequer deficit of €22.1 billion. This compared to a deficit of €7.9 billion for the same period last year. The deterioration reflects an €8.1 billion decline in tax receipts along with a €4 billion capital injection for Anglo Irish Bank and the bringing forward of next year's contribution to the NPRF to facilitate the recapitalisation of AIB and Bank of Ireland. Total voted expenditure was 1.6% below profile at end-November, but it is expected that this shortfall on target will be reduced by the year end.

As Deputy Burton will be aware, November is a crucial month for tax revenue and while still below my Department's forecasts, receipts were not as weak as had been feared in some quarters. By the end of November, approximately €30.8 billion in tax revenue had been collected, which was €1.4 billion or 4.2% lower than profiled. This represented a 21% decline on what was collected in the same period last year.

In particular, November is a significant month for income tax, as returns from the self-employed are received. These returns were broadly on target, leaving income tax €50 million above profile for the month of November. However, it should be noted that revenues were still substantially below the level collected last year, with receipts from the self-employed being down by approximately €379 million or 32% and overall income tax is showing a €1.3 billion or 10% decline in the year to date. The bulk of the remaining shortfall is accounted for by VAT which was €749 million below profile at the end of November, reflecting the continued weakness in consumer spending. Overall, tax receipts are now €1.4 billion behind target.

While the slightly better than anticipated tax performance in November is welcome, it does not in any way lessen the need for action on the Government's part. Taxes are still weaker than was forecast at the time of the supplementary budget and will likely finish the year approximately €1.8 billion below target. Deputies will appreciate that my officials are engaged in an intensive analysis of this issue this week in preparation for the budget and that figure should not be taken as final for that purpose.

This small improvement on the tax shortfall from that anticipated in the Pre-Budget Outlook must be kept in context. Taxes are still down by almost €14 billion on the same point in 2007 and will finish the year at a level that has not been lower since 2003. As the Deputy will be aware, in that time current expenditure has risen by 70%, and that is not sustainable.

We are borrowing to fill the gap between revenue and expenditure and failing to take action now means that our debt levels will increase further and consequently, the cost of servicing that debt will rise. The objective of the forthcoming budget is to stabilise the deficit in 2010. Taking the necessary action now will ensure that confidence is maintained in the Irish economy and that Ireland is favourably placed to benefit from a global recovery as it takes hold.

As is customary, I do not propose to comment in advance of the budget on any matters that might be the subject of budgetary decisions. However, the White Paper on Receipts and Expenditure, which sets out the likely end-year position for 2009 and the no-policy change opening position for 2010, will be published at midnight tomorrow. Full economic and fiscal forecasts on a post-budget basis will be published on budget day, 9 December.

Joan Burton (Dublin West, Labour)
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The Pre-Budget Outlook the Minister mentioned forecast that a further 75,000 jobs will be lost in 2010. In the context of the figures, has the Minister any plans to address the personal tragedies for many of those 75,000 persons?

In particular, the Minister noted that income taxes are down significantly. Does he have any plans to get people back to work and thereby increase the income tax take? As he will be aware, with every person who loses a job the loss to the Exchequer is approximately €10,000 in terms of various tax contributions and PRSI whereas the cost of social welfare is likely to be at least €10,000, and the net cost-loss to the Exchequer is at least €20,000. In the context of the Pre-Budget Outlook and the Exchequer figures, is that still the Minister's forecast? What does he expect net emigration to be?

The Minister mentioned specifically VAT. VAT is down approximately €800 million, according to yesterday's figures. Does he now accept that his decision to put a half-point last year in the first budget for 2009 on the VAT rate bringing it to 21.5% was one of the most disastrous decisions he made and that it drove people north of the Border in droves to shop and look for better value? Has the Minister given any consideration to measures that might attract shoppers back? The Minister is strong on appealing to patriotic duty, but that does not butter too many parsnips when prices in the North can be 60% cheaper. I would like the Minister to address those issues.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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All of the matters referred to by Deputy Burton are being taken into account in the context of preparing the budget. First, as regards the statistics and the projection for those who will be out of work next year, in light of the general economic data available to my Department, a final forecast in that regard will be made on budget day. Conditions in the labour market remain poor, as labour intensive areas, such as construction and the retail sector, have been worst affected by the recession. Employment is expected to fall by 7.75% this year. In recent months, the pace of increase in unemployment has slowed significantly with the underlying unemployment trend falling for the first time in two and a half years. Nevertheless, the rate of unemployment has doubled over the past year. This is a very serious problem and, clearly, measures have to be taken by the Government to ensure that people go back to work. People will go back to work when this country is placed on the road to economic recovery. It will be placed on this road by making the necessary adjustments that must be made in this budget to secure the viability of the economy.

The Deputy referred to shopping in Northern Ireland and the 0.5% VAT rate, but I do not accept her suggestion in that regard. It is interesting to note that the general consensus among United Kingdom commentators is that the decision of the UK authorities to reduce VAT has been an economic failure. I do not believe that the sum of 0.5% in the context of an underlying rate of 21% - which remained constant for many years, with one notable exception in the earlier part of this decade - had much of an impact on shopping in Northern Ireland. This is borne out by the Revenue Commissioners' own investigation of this matter. As I have pointed out many times in this House, the single biggest attraction in Northern Ireland has been the relative price of alcohol compared to the price that obtains in this State. That is as far as I can help the Deputy at this stage.

Joan Burton (Dublin West, Labour)
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Will the Minister set out the facts again? The deficit is €22 billion. There was almost €4 billion for Anglo Irish Bank and €1.5 billion concerning the National Pensions Reserve Fund. That would bring the total deficit for the year to €27.5 billion. Is the Minister not shocked at the sheer scale of the collapse that Fianna Fáil has reduced this country to? When Fianna Fáil came into power, Deputy Ruairí Quinn was the Minister for Finance.

Séamus Kirk (Louth, Ceann Comhairle)
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It is Question Time now, Deputy, not an occasion for Second Stage speeches.

Joan Burton (Dublin West, Labour)
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He bequeathed a modest surplus to the incoming Fianna Fáil Minister for Finance, Mr. McCreevy. In 12 years, Fianna Fáil have managed to turn that modest surplus - when the country was doing well, employment was growing and manufacturing and competitiveness were never stronger - into a catastrophic deficit.

Séamus Kirk (Louth, Ceann Comhairle)
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Does the Deputy have a question?

Joan Burton (Dublin West, Labour)
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The Minister takes an interest in history, but does he not have some regrets? He is defending his decision last year to raise VAT by 0.5%. I only wish that the intelligence of what he was saying was borne out in any way.

Séamus Kirk (Louth, Ceann Comhairle)
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Can we have a question please?

Joan Burton (Dublin West, Labour)
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If one talks to traders in the Border counties, one will find that not only are people shopping for alcohol, but they are also shopping for Pampers and almost anything else where mark-ups in the North are 60% or 70% below mark-ups in the Republic. Why is the Government so utterly powerless to do anything to help traders in the Republic?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is difficult to reply to a statement. I have always made it clear that, in hindsight, I would prefer not to have introduced the rate, given what the UK authorities did in their budget, which was a competitive, aggressive VAT reduction. It was criticised in all the other European states at the time. I did not defend the increase. I made it clear to Deputy Burton, however, that I did not believe the increase of 0.5% on a standard rate of VAT that had obtained for many years, apart from a particular period earlier this decade, had a material bearing on the issue about which she was concerned. I stand over that view.

As regards the wider questions about the grave fiscal position the State faces, it is a very serious position. It is worth noting, however, that the Commission predicted our deficit this year would be about 12.5%. It is clear from the returns we have to the end of November, on an actual basis, that the deficit will be less than 12%. That is lower than the United Kingdom's deficit this year. I take it, therefore, that the Deputy will be raising similar concerns with her comrades who have been running the United Kingdom in recent years.

Joan Burton (Dublin West, Labour)
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I did not realise the Minister was a supporter of the Tories.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am not.

Joan Burton (Dublin West, Labour)
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He always wants to have it both ways.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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We are allied to the Liberals now.

Joan Burton (Dublin West, Labour)
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He is a green Tory.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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No, we are allied to the Liberals. The Deputy was not listening.

Séamus Kirk (Louth, Ceann Comhairle)
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We are getting into extraneous matters. We are on Question Time now.

Joan Burton (Dublin West, Labour)
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We used to have three socialists, but now we have three Tories.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Our allies in the United Kingdom are the Liberal Party. That is where our allegiance lies in the UK. They have a great record in relation to this country.