The final set of Exchequer returns for 2014 indicates the public finances are in an increasingly positive posture as the Coalition faces into the new year. In sum, the data shows the Government taking a big benefit from the turnaround in economic growth and benign conditions in global money markets.

With the general election on the horizon, this makes its task a good deal easier. Pay talks with public sector unions loom. Ministers also face a growing clamour for meaningful cuts in income tax. Their scope for manoeuvre is severely constrained, but there is some wriggle room nonetheless.

But Fine Gael and Labour still face a considerable challenge to regain political momentum in 2015 as Sinn Féin, Independents, Fianna Fáil, the hard left and Lucinda Creighton's new party prepare to intensify the onslaught from the Opposition benches.

These new figures show that the Revenue collected more than €41.28 billion in tax in 2014, €1.24 billion more than forecast at the outset of the year and almost €3.5 billion more than in 2013. This points to a big recovery in tax revenues since the darkest days of the crash, attributable mainly to a general rise in taxation and, latterly, to increased employment as growth boosts job creation.

Historical data

To say that the sweep of historical data is quite stark is to risk understatement. In 2007, the year before the outbreak of full-blown crisis, the State collected €47.25 billion in tax. This dropped to €40.78 billion in 2008, the year of the banking guarantee and the Lehman bankruptcy, and fell yet again to €33.04 billion in 2009.

There was a further decline to €31.75 billion in 2010, the year Ireland sought external aid from Europe and the International Monetary Fund. The loss of €15.5 billion in Exchequer returns over three years had a devastating impact on the public finances, necessitating sharp expenditure cuts and emergency measures to shore up revenues.

The costly road back was as long as it was wearying. The State collected €34.03 billion in 2011, the year voters deposed the Fianna Fáil/Green administration in favour of Fine Gael and Labour. Tax revenues rose in 2012 to €36.65 billion as retrenchment continued under international supervision in the bailout, and to €37.81 billion in 2013. The outturn in 2014 therefore marks the first time since the collapse that tax collections came in higher than €40 billion.

This has come at great political cost to the Government, which now expects a general government deficit in 2014 of about 4 per cent of economic output. This is higher than forecast in mid-October when budget 2015 was predicated on a 2014 deficit of 3.7 per cent of gross domestic product. The increase is explained by a large supplementary spending estimate for the health service, higher garda and prison spending and increased capital provisions for transport.

A further factor, however, is that some of the expenditure on Irish Water in 2014 remained on the State's balance sheet after the introduction of water charges was postponed into 2015. This had been forecast to go off balance sheet under the old scheme. A further test looms on that front next April, when Eurostat in Luxembourg issues a definitive ruling on whether Irish Water's liabilities can go off balance sheet under the new scheme.

Deficit forecast

Government officials say there is no reason to revise the deficit forecast for 2015, estimated to come in around 2.7 per cent of GDP. This is grounded in confidence over projected tax revenues. The argument is also made that the health allocation this year is realistic. Ireland continues to benefit from low borrowing costs on private debt markets, but Minister for Finance Michael Noonan has warned that political instability would lead inevitably to economic instability.

The 2014 performance is a wrap, so eyes turn now to 2015. The election to come will focus attention on the outlook for 2016 and the period beyond.