Finances run €1.24bn ahead of forecast

The Government's financial position is €1.24 billion better than the Department of Finance had forecast, the latest exchequer returns show, writes Colm Keena, Public Affairs Correspondent.

With the 2005 Budget due in just over a month, overall tax revenues in the year to the end of October were up 8.6 per cent on the same period last year. The forecast was that revenues would be up 4 per cent in the 10-month period, and up 5.4 per cent for the full year.

In a statement on the figures Davy Stockbrokers said that almost 20 per cent of annual Revenue collection is traditionally collected in November, which is a big month for self-employed income tax, corporation tax and capital gains tax.

"If the current buoyancy is maintained into November, then the overshoot for the year could be considerably higher again," the firm said.

In the 10 months to end- October the Government received €29.4 billion in tax revenue, compared to €27 billion in the same period in 2004.

Excise, stamp duty, income tax and VAT were all up on last year. Corporation tax was down, at €3.19 billion compared to €3.52 billion last year. It was €209 million behind the forecast for the period, but has improved from the position at the end of September, when it was €281 million behind forecast.

VAT was more than €1 billion up on last year, at €9.99 billion compared to €8.78 billion in 2004. Stamp duty was up 28 per cent, at €2.18 billion, and €427 million ahead of target.

Income tax was up €314 million compared to forecast but most of this was accounted for by the higher than expected haul from the Revenue's special investigations. On capital and current spending, the total was €32 billion at the end of the 10-month period, more than €1 billion behind forecast.

Chief economist with Ulster Bank, Pat McArdle, said the latest figures told a "mixed story". While the taxes associated with spending were doing well, income tax was behind what would be expected given increases in employment and general wage levels. He said a likely reason for this was that a lot of the jobs being created were low-wage positions in the services sector.

He said it looked as if the Minister for Finance would find himself €2 billion better off at budget time than was expected.

The opposition parties said the figures served to undermine the Government's transport plan announced on Tuesday. Fine Gael's finance spokesman said capital spending was 15 per cent below target, casting serious doubts on the Government's ability to deliver capital projects.

Labour Party finance spokeswoman, Joan Burton TD, said the target for exchequer capital spending for the first 10 months of the year was set at €3.6 billion, and the outturn was €3.1 billion. "The idea that the Government will be able to ramp up spending to the level suggested in the transport plan, is nothing short of ludicrous," she said.