A pick-up in tax revenue will help the Minister for Finance, Mr McCreevy, as he finalises his Budget plans for next year.
Income tax revenues continue to recover, according to the latest Exchequer figures, and with signs of a revival in economic growth, expectations for revenue growth next year are improving.
Exchequer borrowing to the end of October was €2.12 billion, up from €440 million for the same period last year. However, if tax receipts are strong for the final two months, borrowing for the year could come in close to the €1.87 billion target set in last year's budget.
The October figures show a continued improvement in taxes, which are now running almost 5 per cent ahead of last year. Much will now depend on tax receipts this month, when a sizeable amount of revenue is due to be collected as self-assessment income tax returns come in. The Department of Finance is maintaining a cautious stance, pointing out that any significant shortfall in November could cost a significant sum in revenue.
A significant tax undershoot would have put pressure on Mr McCreevy, as it would have affected revenue forecasts for next year. However the Minister will still have limited room for manoeuvre . To avoid a big increase in borrowing, he will have to hold the annual growth in spending to around 5-6 per cent in the estimates for 2004, due to be published next week. The Budget itself is likely to show very limited tax changes.
Yesterday's figures show that State investment spending this year is 12 per cent below 2003 levels. Labour's finance spokeswoman, Ms Joan Burton, and Mr Richard Bruton of Fine Gael accused Mr McCreevy of undermining competitiveness through failure to put enough money into this area.
Analysis: page 18
Editorial comment: page 17