The Government is heading for a far better than expected budgetary position by the end of the year as property-related taxation continues to surge, according to Revenue figures published yesterday. Marc Coleman, Economics Editor, reports.
The total tax-take rose by 16.7 per cent in the first five months of the year compared to the same period in 2005, according to monthly Exchequer returns data, as revenues rebounded from a disappointing April performance.
Finance Minister Brian Cowen yesterday welcomed the figures but Fine Gael Finance spokesman Richard Bruton said the Government was presiding over a "rollercoaster economy".
Labour party spokeswoman Joan Burton said higher tax revenues were not resulting in improved public services or infrastructure.
The Government received a total of just under €17 billion in tax revenues in the first five months of 2006. A total of €14.5 billion was received in the first five months of 2005. At the time of the last budget, the Government forecast it would receive €16.1 billion during the period.
Revenues are now 5.5 per cent ahead of profile. The figures also reveal that public spending is 3.3 per cent lower than expected, though still 7.7 per cent up on last year. Compared to an expected deficit of €143 million for the period, the Government is now running a current budget surplus of €1.8 billion.
Corporation taxes rose 45 per cent in May but this was down to timing factors.
But annual growth in the year to May continues to be dominated by property related taxes. Government has now received a total of €1.3 billion from stamp duties in the first five months to May, a rise of 38 per cent.
Stamp duties are now 24 per cent higher than expected at the time of the last budget and the Government now receives almost 80 per cent as much from this source of taxation as it receives in corporation taxes. Capital gains tax and capital acquisition tax receipts were also higher than expected, up 35 per cent and 24 per cent over budget time forecasts.
VAT and customs duties also performed well, rising by 16.5 per cent and 12 per cent respectively. Income taxes and excise duties rose by more modest but still strong rates of 10 and 11 per cent respectively in the year to May.
"The odds suggest that the actual Exchequer Borrowing Requirement at the end of 2006 will be significantly lower than the €2,927 million projected by the Department of Finance," Bloxham stockbroker economist Alan McQuaid said yesterday.
Minister for Finance Brian Cowen said the figures "demonstrate the continued strength of both the economy and our fiscal position".
But Fine Gael Opposition spokesman Richard Bruton warned of a pre-election surge in spending: "The Government must resist the temptation to ratchet up spending in advance of the general election, or risk doing serious long-term damage to the economy".
