THE Government recorded a surplus of close to £300 million on its current budget last year, the Minister for Finance, Mr Quinn, will announce today. The strongest Exchequer performance for many years resulted from a faster-than-expected rise in tax revenue, which more than compensated for overspending in some areas.
It will be only the second time that a surplus has been recorded on the current budget in recent years. The figures are expected to show, however, that Exchequer borrowing to fund capital investment was higher than forecast at more than £700 million.
The injection of £50 million into Bord na Mona as part of a restructuring programme was one of the factors bringing capital borrowing more than £50 million above its 1996 Budget target.
This will leave the overall level of Exchequer borrowing for last year at somewhere over £400 million, still £300 million lower than forecast on Budget day last January.
Tax revenues last year rose by more than 11 per cent, well ahead of the Budget forecast of a 6.5 per cent increase. This means that tax revenues came in some £400 million ahead of forecast last year, with the strong growth in employment and consumer spending boosting taxes across the board.
The strength in tax revenue - much greater than even optimistic forecasters had expected at the start of the year - is expected to continue into this year. This will give the Minister scope for considerable tax relief in his 1997 Budget package to be unveiled on January 22nd.
An income tax package of some £300 million is expected, including a reduction in the standard 27 per cent rate of income tax. A one point cut in the 5.5 per cent standard rate of employees' PRSI is also under consideration, while the standard income tax band and personal allowances will also be increased.
The Budget is also expected to include a £30 million business tax package, including reductions in the 38 per cent and 30 per cent rate of corporation tax.
Mr Quinn will also have about £150 million to spend on Budget day to increase social welfare payments.
