A lorry drove over the green shoots

Another month’s exchequer returns — and this is the press release account, so it’s phrased to sound like good news:

At end-March, €7¼ billion in tax receipts has been collected, some 3½ per cent behind profile for the period and 15 per cent below what was collected in the first quarter of 2009. However, a substantial year-on-year decline had been anticipated in the early stages of 2010 and for the year as a whole, the Budget day forecast of €31 billion, which represents a 6 per cent year-on-year decline, is still a valid target. The widely held view is that the economy will return to growth in the second half of the year and this should improve tax performance.

On a tax by tax basis, it must be worrying that income taxes are somewhat off already, corporation tax is down a lot as well, and the housing market (via stamp duty) has flatlined as a revenue source – and remember, these are the figures against profile i.e. the projections as of the end of December.  That’s not that long ago.

As things stand now, spending is being cut just enough to keep pace with falling taxes and stabilize the deficit at around 12 percent of GDP — not counting promissory notes.  As the Minister’s statement makes clear, the current economic strategy is simply fingers crossed that things turn around in the 2nd half of the year.  But they have no actual evidence yet for that being the case.