THE latest Exchequer returns show that while tax revenues have been exceptionally high in the first six months of the year, Government spending is also running above target.

Income tax, VAT and excise revenues have all come in well above target and indications are that corporation tax receipts are also performing well.

Income tax revenues grew very strongly in the six-month period, rising by 10.2 per cent compared to the same period in 1995.

Commenting on the higher than forecast growth yesterday, the second secretary at the Department of Finance, Mr Michael Tutty, said the increase clearly suggested that employment had grown at a much greater rate than expected. The Department, which had forecast a 31,000 rise in employment this year, would be revising these figures later this month, he said

Consumer spending has also shown good growth with VAT receipts up 14.5 per cent, mainly reflecting record new car sales. Excise duty also rose, with receipts up by 5.3 per cent to £1.03 billion.

Due to delays in the processing of corporation tax receipts, the latest figures were below trend. Because of the June 28th deadline for payment of corporation tax, which fell on a Friday this year, the hulk of payments were not processed until July 1st and, as such, were not included in the official figures.

On the other hand, Government spending overran Budget targets, with current spending up by 10.2 per cent to £6.181 billion over the period. Mr Tutty said much of this increase was due to higher-than-expected unemployment, increased EU beef fines and unexpected costs incurred as a result of the BSE scare. Garda overtime costs to prevent smuggling of cattle across the Border alone added an extra £25 million to spending, he said.

Commenting on the rise in Government spending, the Irish Business and Employers' Confederation yesterday called on the Government to immediately lake action to contain any emerging overrun.

IBEC director, Mr Brian Geoghegan, said the returns confirmed the buoyant performance of the economy, particularly in relation to employment. It is a pity that gains from lower debt service costs have not been accompanied by slower growth in current spending in order to ultimately lead to lower taxes."