Tax revenues for the first five months of the year have come in well ahead of target, opening the way for a giveaway budget at the end of the year.
Exchequer returns for May, which were released yesterday, show that tax receipts of €14.5 billion are some €239 million ahead of the Department of Finance's target for this point in the year.
Overall expenditure in the year to date was €15.1 billion, some 5.7 per cent ahead of the first five months of 2004.
Total receipts including taxes for the period were €14.96 billion, which was 12.4 per cent ahead of last year. The Exchequer deficit stood at €142.6 million compared to €495 million last year.
There was consensus last night that the trend indicated the General Government Balance would be in the black or close to it by the end of of the year, as against the deficit of €1.2 billion forecast by the Minister for Finance, Brian Cowen on Budget Day.
Austin Hughes, economist with IIB Bank, said the figures indicated that the Minister could have up to €1 billion extra as a result of tax overshoots and spending undershoots "setting the scene for a very generous budget". Although the Government has two Budgets to go before it must call an election, this December's Budget would be seen as an election Budget, he said.
Pat McArdle, chief economist with Ulster Bank said that the figures painted a "fairly positive picture" and that tax receipts looked set to come in around €650 million ahead of target at year end.
The continued housing boom and consumer spending - which feed into, excise, VAT and stamp taxes - were the main factors in this, he said. He noted that, while income tax receipts of just over €4 billion were on target, a better out-turn might be expected given other data pointing towards strong employment growth.
Spending by Government departments is also behind target and the extent to which this remains the case, will have a bearing on the full year figures. "Its could be as much as €400 million, but it's probably to early to say anything about that," said Mr McArdle.
