Tommy Broughan (Dublin North East, Labour)
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Question 81: To ask the Minister for Finance the possible tax implications for Ireland's positive external balance in comparison with other eurozone peripheral countries; if he agrees that the proposed massive fiscal contraction in 2012 may be necessary; and if he will make a statement on the matter. [21711/11]

Michael Noonan (Limerick City, Fine Gael)
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Ireland recorded a current account surplus in 2010 for the first time since 1999. This is very encouraging and shows that Ireland is paying its way in the world. The balance of payments is split between the public sector balance and the private sector balance. The public sector element of the balance of payments has a significant deficit. For example the exchequer deficit in 2010 was €18.7 billion and is forecast to be over €18 billion again this year.

On the private sector side, the savings rate is at historically high levels. This reflects the fact that Irish companies and individuals are paying down their own debt as well as increasing their precautionary savings. This is resulting in a significant private sector current account surplus. The extent of this surplus outweighs the large public sector deficit. There are obvious tax implications from the higher level of household savings on deposit in the Irish banking system through DIRT. However, DIRT represents just over 1% of the overall tax take and that is unlikely to increase significantly this year, notwithstanding the increase in the DIRT rate from 25% to 27%.

The Government is committed to implementing an overall adjustment package of at least €3.6 billion in 2012. This is to ensure the deficit target for 2012 can be achieved. As we go through the second half of the year, we will have to study closely the emerging trends, both positive and negative, and formulate what the likely outlook for 2012 will be.