Surging tax revenues continued to boost Government finances in July with the Exchequer's 2006 surplus rising to €1.2 billion.

Figures released yesterday by the Department of Finance show the Government has collected ¤23.4 billion in tax so far this year, 12.4 per cent ahead of the same period last year and €1.3 billion ahead of the Budget day forecast.

The increase is more than double the 6.1 per cent full-year growth rate projected for tax revenue.

However, it has slowed slightly from the 13.6 per cent year-on-year rise in revenue recorded in the first half of the year.

The figures reiterate the Governments increasing dependency on the property market with stamp duties last month bringing in almost €390 million, 54 per cent ahead of the July 2005. Over the first seven months of 2006, stamp duties of just under €2 billion are 43 per cent ahead of the previous year period and 30 per cent ahead of Budget targets.

All tax categories are ahead of forecast at this stage with the strongest performers, aside from stamp duty, being capital gains tax (30.4 per cent over target at €926 million), capital acquisitions tax (25 per cent ahead on €187 million) and corporation tax which, at €2.26 billion so far this year, is 16 per cent above Budget day projections.

Income tax receipts, which had been lagging Government forecasts, are now 1 per cent ahead of projections. At €6.17 billion, year to date, they are now 4.7 per cent ahead of the same period last year. Davy economist Rossa White said income tax receipts were better than might appear on first glance.

"Some commentators have pointed to sluggish income tax receipts . . . but it must be remembered that the income tax line was boosted by €397 million from special revenue investigations in the first seven months of last year. Year to date, the equivalent bonus is only €66 million. As a result, underlying income tax growth was 11 per cent year on year in the first seven months of 2006".

On the spending side, the figures remain well below target - 8.8 per cent ahead of the first seven months of 2005 and well short of the 13 per cent-plus budgeted for by the Government for the full year.

Fine Gael finance spokesman Richard Bruton said Minister for Finance Brian Cowen could raise €2 billion more in taxes over the full year than targeted in the Budget if current trends continue.

But he said the "extraordinary dependence on the housing boom" was worrying. Bloxham economist Alan McQuaid said the Department of Finance, which last month revised down its forecast full-year Exchequer deficit from €3 billion to in the vicinity of ¤1 billion, was still being overly cautious.

"The bottom line as regards the out-turn for 2006 is that if tax revenue growth remains in high double digits, as we expect, then the overall budget situation this year will be a lot healthier than envisaged at Budget time and we still think there is every chance the Government will post a surplus of €500 million or more come year-end."