Cowen warns of cutbacks pain
The Government’s tax take for 2008 could be slashed by €3bn and necessary cutbacks may cause pain, the Taoiseach told the Dáil today.
However, speaking ahead of the publication of the half-yearly Exchequer Returns, Brian Cowen rejected claims that services would face widespread disruption.
Speculation mounted that the January-June figures could show a shortfall of up to €1.5bn in expected tax revenue.
Opposition parties rounded on Mr Cowen in the Dáil today and accused him of squandering the Celtic Tiger boom.
However, Mr Cowen said: "There is €3bn less in tax coming in this year than was hoped for and we have to deal with that situation in the best way we can.
“We will have to cut our cloth to measure on the basis of the revenues that are available to us now.”
He added: “There is no easy, painless way in which this can be done but we will do it as conscientiously as we possibly can.”
The Taoiseach said current industrial output remains 30% higher than in 2002. “That is not a bad position to be in because every other country is being affected by the international economic climate,” he told TDs.
Labour Leader Eamon Gilmore accused Mr Cowen of dodging the seriousness out of the economic crisis.
“You have sleepwalked this country back into a recession. You are very slow in coming forward with positive ideas on what you are going to do. But you are full of bluster and bluster won’t get you out of this mess,” said Mr Gilmore.
Mr Cowen denied there would be a “disruption of services all over the place” to make up the three billion euro deficit by the end of the year.
“That is not the position. And there is nobody suggesting that we should do that. That would be the wrong thing to do. In good times we’ll build surpluses. In more difficult times we will have deficits.”
In today’s Exchequer figures, the dramatic slowdown in the construction sector is expected to drag down growth rates and slash stamp duty revenue.
The Government said it will take decisions based on the data at next Tuesday’s Cabinet meeting and later outline the plans in the Dáil.
The main political parties are to hold a major debate on the economy next week before adjourning for the summer recess.
Finance Minister Brian Lenihan is expected to break with tradition and attend a news briefing on the figures by officials from the Department of Finance.
