Government will have to make the hard choices
The year is just five days old and already there are clear indications that the Government will struggle to meet its 2012 budgetary targets. The 2011 Exchequer Returns, which were published yesterday, show that tax revenues were €873m below target last year while the VAT take was almost €470m off target.
It was only the 22pc jump in income tax receipts, driven largely by the introduction of the universal social charge at the start of 2011, that kept the public finances more or less on track last year. The €2.5bn increase in the income tax take, the equivalent of almost €1,400 for each of the 1.8 million people still working in this country, was clearly a once-off and cannot be repeated this year.
The centrepiece of the Government's 2012 Budget was the 2pc increase in the standard VAT rate to 23pc. The Government hopes to raise an extra €670m from the VAT increase this year, almost two-thirds of the €1.1bn of extra tax revenue which the Government has pencilled in for 2012.