Tax revenues are running well ahead of target, leading to calls for the Government to reverse welfare cutbacks and commit itself to tax cuts.
Exchequer figures for the first quarter of the year, published yesterday, showed a 15 per cent rise in tax receipts, comfortably ahead of the 10 per cent target. This leaves the Minister for Finance, Mr McCreevy, well ahead of his Budget projections.
Strength in the property market helped to push up capital gains tax and stamp duty, with overall tax revenues more than €300 million ahead of target in the first quarter.
With spending running below expected levels, the Exchequer had a surplus of tax over expenditure in the first quarter of 2004 of €272 million, compared with a deficit of €205 million in the same period last year.
The Minister, speaking at a meeting of EU finance ministers in Punchestown, played down the figures, saying they only represented the first quarter and that it was too early to be definitive about the likely trend.
Perhaps anticipating pressure on the Government, the Taoiseach, Mr Ahern, said in a speech in Dublin that a prudent policy approach must be followed, despite improving economic indicators.
However, private sector forecasters believe the Government is on target to undershoot its Budget borrowing targets quite comfortably and will head into 2005 in a strong position. This is before account is taken of the as yet unquantified once-off revenue boost from the 15,000 people who have made declarations to the Revenue Commissioners about offshore accounts.
Trade unions , ahead of talks on pay due after Easter, said the figures showed there was scope for tax relief for employees.
The last Budget was "outrageously mean", commented Mr Jack O'Connor, SIPTU's general president, highlighting the impact of the freezing of the income tax bands.
"The ball is now firmly in the Government's court to make good on promises previously broken," he said. The unions now look set to push hard for tax commitments as part of the talks on pay for the second 18 months of the new national agreement.
Meanwhile, the Opposition parties also attacked Mr McCreevy. Fine Gael's Mr Richard Bruton said that excess funds should be used to pay off the national debt and not give "a pre-election slush fund to profligate Ministers".
For Labour, Ms Joan Burton said that cuts in welfare payments, including widows' entitlements, must now be reversed. Finance officials, questioned on this issue yesterday, said it was "under review" and was a matter for political decision.
Economists were also very encouraged by yesterday's US jobs figures, which showed a sharp 300,000 rise in employment last month, well ahead of expectations and sharply reducing fears about the sustainability of the recovery in the world's biggest economy.
