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TAX TAKE PLUMMETS

And the “hits” keeping coming, as the old-time disc jockeys used to say. The Sunday Business Post predicts that figures for the first two months of the year –  to be published this week  – will show that the tax take is down 20 per cent on the same period in 2009. Vat receipts are significantly down and income tax is also below expectations.The Department of Finance is bending over backwards to show the markets that it is prepared to meet the effects of the tax drop.  It has requested spending cuts of €1.5 billion for next year based on the finding of the An Bord Snip report. A further billion is to be cut from capital spending and €500 million is to be found in savings from the reform of work practices in the public service. If the reforms are not forthcoming, the Department is to look for further reductions in the public service pay bill.
The request from the Department is contained in a confidential memo circulated to Ministers this weekend. Finance has asked the Departments to submit preliminary proposals for the cuts by this Friday. The memorandum marks an early start to the process of agreeing next year’s Budget. The Government is determined not to repeat last year’s problems when negotiations with the public sector unions ran right up to the Budget.

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