Tax revenues in the first eight months of the year were slightly ahead of target, according to exchequer returns published this afternoon.

The budget deficit widened to €20.4 billion on the back of the State's injection of funding into the banking system.

A total of €20.5 billion in taxes was collected over the eight-month period, 1 per cent or €204 million ahead of the target set out in the budget for 2011. In August, €1.9 billion in revenues were collected, an increase of just under 7 per cent compared to August 2010.

Over the first eight months of the year, revenues were 8.3 per cent higher compared to the same period in 2010.

According to the figures, three of the four big tax streams were ahead of target by the end of August, with the notable exception being VAT, reflecting the weaker domestic consumer environment.

Income tax was 1.6 per cent, or €131 million, ahead of target. However, excluding the impact of earlier-than-expected Dirt payments in April and July, income tax was 1 per cent below target in August.

In the first eight months of the year corporation tax was €67 million, or 4 per cent, above target, while excise duties were €62 million ahead of target, a 2.1 per cent surplus.

VAT recorded a shortfall of 3.3 per cent over the first eight months, or €229 million below target, the third consecutive month it has failed to reach targets.