Exchequer returns for July show the public finances were in surplus by €255 million, compared to a deficit of €241 million at this stage of 2003.
The figures show surging tax receipts will cut the Exchequer borrowing requirement this year to €1.3 billion below forecast giving the Government ample opportunity for tax cuts.
Income tax receipts for the first seven months of year rose by 24 per cent to €5.6 billion compared to €4.5 billion in 2003.
Total tax receipts were €19.6 billion substantially ahead of target thanks in part to an injection of funds last month from the Revenue Commissioners emanating from its tax-evasion investigations.
Capital gains tax rose from €173 million in 2003 to €523 million this year, an increase of over 200 per cent.
Current expenditure rose to €17.5 billion compared to €16.6 billion for the same period last year.
Fine Gael Enterprise, Trade & Employment spokesman Mr Phil Hogan expressed concern that the improved public finances may not lead to a relaxation of the indirect taxes introduced by the Minister for Finance in his last two budgets.
"The economy appears to have recovered from the Government's reckless spending spree before the last general election, when it raided State coffers in an effort to buy the election.
"However, given the very healthy tax take there is every reason to fear that the Government is now building up a war chest for the next time," the Carlow-Kilkenny TD said.