Eamon Gilmore (Dún Laoghaire, Labour)
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Question 121: To ask the Tánaiste and Minister for Finance if his attention has been drawn to the concerns expressed by the Comptroller and Auditor General in his most recent report at the significant underestimation of tax revenues by his Department in each of the past three years; the steps he is taking to ensure a more accurate level of forecasting by his Department; and if he will make a statement on the matter. [23674/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Exchequer tax revenues in each of the last three years have been better than Budget Day estimates. In 2004 tax revenues were 6.5 per cent ahead of target. In 2005, receipts were 4.7 per cent ahead of target and in 2006, tax revenues were 9.3 per cent ahead of target. These additional receipts allowed for a significant reduction in debt levels which is a welcome outcome. One of the reasons for the improved revenue performance was stronger economic activity in the years in question.

Excluding the impact of special investigations receipts, which, by their nature, could not be forecast with any degree of accuracy, the "big four" taxes — VAT, income tax, corporation tax and excise duties — which have accounted for around 85-90 per cent of actual tax revenues in the last three years have been close to target, particularly in 2004 and 2005.

Nevertheless, my Department is anxious to provide the most accurate tax forecasts possible in order to assist in managing the economy and the budgetary process. Therefore, the approach to tax forecasting is kept under review on an ongoing basis. For that reason, a Group chaired by a Senior Economist from the Central Bank, currently on secondment to the Department of Finance was formed to conduct a review of the methodology employed. I expect to receive a copy of the Group's report shortly.