Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 71: To ask the Minister for Finance the steps he has taken to ensure better reporting going forward in view of the previous failings of his Department to accurately predict tax revenue; and if he will make a statement on the matter. [38668/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Last year, my Department's Budget 2008 forecast assumed tax revenue growth of 31⁄2% for 2008. This was viewed as a conservative forecast by many commentators and in fact others, such as the ESRI, forecast stronger revenue growth at the time. However, tax revenue weakened considerably as the year progressed, reflecting the challenging domestic and international economic environment. Consequently, the Department of Finance expects an end-year tax shortfall of the order of €61⁄2 billion. As part of Budget 2009, my Department forecast tax revenue growth of approximately 1% in 2009 as a result of significant revenue raising measures introduced in the Budget.

Earlier this year, the Department of Finance published a report produced by a group specifically established to examine the tax forecasting methodologies used by the Department. The Tax Forecasting Methodology Review Group comprised of experts from the Department of Finance, the ESRI, the Revenue Commissioners, the Central Bank and had input from the EU Commission.

In terms of the findings, while the Group suggested that the Department of Finance displays a prudent bias in tax forecasting, it did not suggest any major structural recommendations to the way the Department forecasts tax revenue. However, it did suggest a number of adjustments which the Department is currently implementing. Furthermore, the Group's report also indicated that the Department's methods were not out of line internationally. A copy of the Group's report is available on the Department of Finance website at www.finance.gov.ie.