The disastrous exchequer figures demonstrate that the Government has completely lost control of the public finances. Unless the Government takes strong action quickly we will have to borrow between €16bn and €20bn this year.
If the Irish Government were a company, the insolvency experts would have been called in at least six months ago. Even before the publication of the disastrous full-year exchequer figures yesterday, it was clear that the public finances had gone seriously off the rails.
In 2008 the Government took in €40.8bn in tax revenue. This was €8bn lower than the near-€49bn which the Government had hoped to collect.
Not alone was 2008 tax revenue well shy of the targets set in the December 2007 budget, it was also well down on previous years -- 14pc on 2007 and 10pc on 2006. Last year's tax revenues fell to levels last seen in 2005.
So how could the Government get things so utterly wrong?
At the peak of the construction and property boom in 2006, the Government was raking in an estimated €10bn on property-related taxes, almost a quarter of all tax revenues. This included stamp duty on the sale of houses and other property, VAT on new houses, the PAYE and PRSI being paid by building workers, corporation profits tax being paid by building and property companies, as well as capital gains tax on one-off property profits.
Last year, stamp duty and corporation profits receipts fell to their lowest levels since 2002. Even more worryingly, VAT and income tax receipts, which had held up reasonably well for most of the year, collapsed in the final quarter of 2008 as the implosion of the building industry intensified.
What this means is that most of the €10bn in property and building-related tax revenues, which the Government received as recently as two years ago, has evaporated.
As the building boom could not last forever, this revenue was always a one-off. Sooner or later, the tap was going to be turned off. Realising the temporary nature of this revenue, the Government should have done the sensible thing and used this money to either pay down the national debt or top up the National Pensions Reserve Fund.
Unfortunately, the Government did neither of these things. Instead, it used this once-off windfall to fund a public spending spree, entering into permanent commitments on the back of temporary revenues. What the Government did would have been a bit like you or me using the money we received from an inheritance to pay for our annual sun holiday rather reducing our mortgage.
While the collapse in property and building-related tax revenues hardly came as a surprise, the speed of the turnaround in the public finances has been truly shocking. As recently as the first quarter of 2008, tax revenues were running "only" 6pc behind the same period for 2007. This had risen to 22pc by the final quarter of the year.
In other words, tax revenues fell off a cliff in the final quarter of 2008.
With the economy forecast to shrink by at least 4pc this year, the outlook for 2009 tax revenues is equally bleak. It is already clear that the forecasts contained in last October's budget, which projected tax revenues of €42.8bn for this year, have been completely overtaken by events.
Far more likely is a further sharp fall in tax revenues for this year.
In 2008, the Government was forced to borrow almost €13bn. This will rise to somewhere between €16bn and €20bn this year. If nothing is done, our success in bringing the national debt under control over the past two decades will have been thrown away in just three or four years.
We have had enough of empty promises. The time for action is desperately short. Unless the Government moves quickly and decisively, we are about to experience a fiscal crisis worse than anything we endured during the 1980s.