THE amount of tax coming into the Exchequer surged ahead last month, confirming that the economy is continuing to grow very strongly.
The Exchequer took in £1.19 billion in tax revenue in January, almost 30 per cent more than for the same period last year.
The figures were boosted by VAT increases of £120 million, carried over from last year. However, discounting this, tax revenue still grew by 16 per cent over the previous January.
"The very strong growth in tax goes hand in hand with news that car sales were up 20 per cent in January," Mr John Beggs, chief, economist at AIB, said.
He added that the figures point to a speeding up of growth in the second half of last year which is likely to last for the first half of this year at least.
Other signs that the economy is still powering ahead include a resurgence in the housing market.
The only downside to all this is the possibility that inflation may pick up. But so far there has been no real evidence of this.
The ratification of the Partnership 2000 agreement will help keep costs in check while the Government has shown its determination to keep prices down with its quick move against the publicans.
Mr Beggs added that growth will not necessarily slow down. "People always think that growth cannot or will not be sustained," he said. "But the housing market, cars and tax revenues are certainly showing a strong continuation."
And the environment remains very strong. The Budget measures will add around 2 per cent to 2.5 per cent to disposable income in April so there is the capacity for the economy to keep growing.
Possible clouds on the horizon are the banking figures which will be released tomorrow. If the figures for credit and mortgage lending are very strong they will increase the possibility of the Central Bank raising interest rates.
Most economists believe that a figure showing credit growth above 17 per cent will be seen as dangerous by the Central Bank and could lead to a small rise in retail, including mortgage rates.
