Continuing strong growth in employment and a surge in consumer spending in 1999 have left the Exchequer with a record £1.2 billion (€1.5 billion) surplus. The excess of receipts over expenditure is well above Department of Finance estimates and is further evidence of the rapid expansion of the economy.
The Budget surplus targets for 1999 had suggested a surplus of £925 million by year end, some £267 million lower than the actual out-turn. This figure was subsequently revised on Budget Day (December 1st), when the surplus was forecast to come in at £1.1 billion, which also proved to be substantially short of the ultimate figure.
Announcing the figures yesterday, Department of Finance second secretary Mr Michael Tutty said the returns would suggest the economy had grown by 7.5 per cent in 1999 and that the Government was managing the public finances well.
"All the commentators tell us governments should be running strong surpluses when the economy is going well - and that is what is happening," he said.
The Department of Finance is predicting that the economy will continue to grow strongly again in 2000, and has issued a Gross National Product forecast of 6.25 per cent. Mr Tutty suggests that the year-end Exchequer surplus could rise to £1.6 billion.
In a statement, the Minister for Finance said the figures highlighted the continuing soundness of the public finances and he pointed to the benefits to the economy delivered in Budget 2000.
"The 2000 Budget will deliver substantial improvements in public services this year and the National Development Plan will make significant progress in addressing our infrastructural needs over the life of the plan. In addition, all taxpayers will benefit from the changes in the tax system announced in the recent Budget," he said.
Tax revenues made a significantly stronger contribution to the Exchequer coffers last year, yielding £1.2 billion, an increase of £175 million on 1998. This figure was 7.5 per cent ahead of official estimates at the beginning of 1999 and 14 per cent stronger than those issued in last month's Budget.
Income tax receipts accounted for £379 million of the total tax take, while corporation tax contributed £421 million. VAT revenues came in at £41 million, while excise receipts soared to £107 million. Mr Tutty said this largely reflected the huge increase in the number of new cars purchased during the year. The excise take was also boosted last month by additional cigarette sales, with evidence that many smokers were stocking up ahead of the expected 50p increase on a packet of 20 cigarettes in the Budget.
Government spending was also ahead of official estimates. The figures show the current expenditure at the end of 1999 was £12.1 billion, some £111 million higher than forecast in the 1999 Budget but £1 million lower than the revised estimate in the last Budget. Much of the additional spending was offset, however, by reduced social welfare expenditure during the year as a result of falling unemployment in the economy.
The main spending increases were in health (£157 million) and education (£103 million). Some £32 million went to the agriculture sector, while social welfare spending fell by £111 million.
Exchequer funds were also swelled by Government proceeds from the Eircom flotation. The Exchequer received £3.7 billion from the sale of the company.
