Growth in jobs and spending to boost tax take

FIGURES to be published today will show that tax revenues were exceptionally strong last month, auguring well for the Exchequer finances for the year. The Exchequer borrowing figures for January are expected to show that income tax receipts in particular are powering ahead with strong growth also in VAT and other indirect taxes.

Today's figures are expected to show that income tax surged by at least 18 to 19 per cent last month, compared to the same month last year.

This appears to indicate that employment growth is continuing at a high level into 1997, boosting the Exchequer tax take. VAT receipts are also expected to be buoyant as consumer spending remains strong.

The figures are well ahead of the expectations of Department of Finance officials and mean the Minister for Finance, Mr Quinn, may again be on target to undershoot his Budget day borrowing target, which is for an Exchequer borrowing requirement of £637 million, or 1.6 per cent of GNR.

The Budget figures predicted an 8 per cent increase in income tax receipts this year but, on the basis of the January figures, this may again be an underestimate. Total tax receipts are expected to rise by close to 6 per cent this year to £13.263 billion.

However in recent years the Department of Finance has taken too conservative a view, leading to Exchequer borrowing continually undershooting its Budget targets. If the January trend is maintained, then another undershoot may be in prospect, leaving Ireland comfortably within the Maastricht criteria for budget deficits.