Property slowdown reduces tax take

A slowing property market and a lower tax take from companies resulted in the tax collected by the Government falling sharply in the first two months of the year, according to the latest Exchequer figures.

The €7.5 billion in tax received by the Exchequer in the two months to the end of February was some €684 million less or 8.2 per cent lower, than the same period of 2007. It was almost €500 million below the Department of Finance's own expectations.

The reduced tax yields reinforce concerns that the economy will be subdued this year.

The €372 million yield from stamp duty, was almost half the sum received the previous February which stood at €669 million.

Capital gains yields - another property-related tax - have also fallen sharply, dropping to €516 million, compared with €846 million last year.

The overall amount of income tax collected was slightly higher, however, at €2.24 billion, compared with €2.17 billion for the same period last year.

The rise in income tax receipts suggests that despite the slowdown, the employment market is holding up reasonably well.

Another positive for the Department of the Finance is that excise taxes, at €922 million, and VAT at €2.69 billion, both performed strongly with the latter just €65 million lower than at this stage in 2007.

Overall the Exchequer recorded a deficit of €124.7 million in the first two months of the year compared with a surplus of €2.2 billion a year earlier as tax income declined and spending rose.