BUOYANT tax revenue, boosted by a 50,000 rise in the numbers at work, has put the Government in a strong position to deliver a generous Budget on January 22nd.
Tax and spending figures for 1996 released yesterday show the healthiest Government finances- for more than 20 years, with a strong surplus on the current account. Revenue from taxes and other sources exceeded day-to-day spending by £292 million.
The results for 1996 show that the Government is well placed to deliver significant tax concessions in the Budget. Under the Partnership 2000 programme, £900 million in income tax cuts and £90 million in corporation tax cuts have been promised over the next three years.
The latest figures indicate that £250 million to £300 million could be spent on tax cuts this year without jeopardising membership of the European Monetary Union, which will he based on the Government's spending and revenue performance this year.
A reduction in the standard 27 per cent income tax rate, widening of the standard rate tax band and increased PAYE allowances are expected. Other expectations include a cut in the current 5.5 per cent rate of employees' PRSI and a reduction in the 38 per cent rate for corporation tax.
Despite current and capital spending running ahead of targets set in the 1996 Budget, strong tax, revenue meant that Government needed to borrow only £437 million to run the State last year. This was well below the Exchequer Borrowing Requirement target of £729 million set in the 1996 Budget.
In a buoyant economy - the Department of Finance estimated economic growth (GNP) at 6.25 per cent in 1996, compared with an original forecast of 5.25 per cent - tax revenue rose strongly in all areas. The Government took in £452 million more in taxes than it had anticipated.
With 50,000 more people at work, income tax receipts were, £174 million higher than expected at £4,562 million. Corporation tax contributed £136 million more than had been expected at £1,426 million. Excise taxes, including vehicle registration tax and taxes on alcohol and oil, contributed an extra £96 million, with an expected increase of 4 per cent in receipts under this category turning into an 8 per cent rise.
VAT contributed £17 million less than forecast at £3,105 million. But this was because the Government allowed companies" to defer their December advance VAT payments until January.