BOOMING tax revenues will generate up to £400 million more for the Exchequer than the Government has budgeted for, according to the latest returns. The flood of money will give the Government more room for manoeuvre in the 1998 Budget, due in October, and should help to cut borrowing.
A farther sign of the strength of the economy is the first official confirmation that second hand house prices in Dublin rose by over 20 per cent last year.
The Exchequer returns to the end of March show that the Government only had to borrow £151 million during the first three months of this year. Last year, that figure was £561 million. Although the figures must be treated with some caution because of special once off timing factors, they do show that tax revenues across almost all areas are bounding ahead.
New jobs as well as higher wages are likely to be responsible for the boom in tax, which is up 16 per cent on last year, itself a very good year. A fall off in the live register of 22,000, which curtailed social welfare spending, also helped boost the figures.
Mr Jim O'Leary, chief economist at Davy Stockbrokers, said it was "reasonable" to suggest that the tax take will be £350 million to £400 million higher than expected.
Revenues have also been boosted by a sharp increase in stamp duty revenues, which have risen by 24 per cent to almost £93 million, due to the continuing rise in house prices.
Figures released yesterday confirmed officially that second hand house prices in Dublin rose by over 20 per cent last year and by 17 per cent nationally, while a record number of new houses were built.
The Minister for Finance Mr Quinn, stressed that while he is pleased with the result, the Government should not be borrowing at all when the economy is doing so well. "The extra money is just not there" to meet demands for further spending, he said.
A spokesman for the Minister stressed Ireland has to start preparing for 2001 when EU funds will begin to dry up. Any extra revenue from tax this year should be used to cut borrowing, he added.
Nevertheless, Mr Quinn may find it difficult to resist demands. There are already calls for further pay rises from some sectors of the health service as well as other possible costs arising, such as compensation for soldiers with damaged hearing.