New Exchequer figures mean the Government is more likely to be able to cut taxes in the next Budget.
The latest Exchequer returns show the state ran a surplus of nearly €200m in the first three months of the year.
Minister for Finance Michael Noonan said he still hopes to be able to cut income taxes further in October's Budget.
“Last October I said that in terms of income tax and USC reductions that I would like to mirror the reductions that we made last October, in next year’s budget, and if we were re-elected in the one after and I estimated that if we did it for three budgets it would mean 12,000 extra jobs in the Irish economy,” he said.
The latest tax figures showing the State took in €197m more than expected in the first quarter of the year – €2.5bn ahead of the same figures last year.
The Exchequer statement for the first quarter of 2015, published today by the Department of Finance and the Department of Public Expenditure and Reform, show that quarterly figures are the strongest in several years, with tax revenue outstripping last year’s equivalent total by 10 per cent – up €302m. Income tax revenue in March are 6 per cent ahead of expectations, and up €302m year on year. Overall, headline tax revenues were 5.5 per cent ahead of profile.
VAT receipts are up 12 per cent year on year, while spending is down 0.2 per cent. Health vote spending is 1.4 per cent below expected.
The improved figures are due primarily to increased tax revenue and reduced net voted expenditure; however the largest contributor to the figures is a transfer of €1.64bn from the National Pension Reserve Fund to the Exchequer. This figure relates to the sale of Bank of Ireland preference shares that had been used to part finance the early repayment of IMF loans.
Commenting on tax revenues, Mr Noonan said:
“Overall, the tax performance for the first quarter of the year is ahead of expectations, with headline tax revenues coming in nearly 5.5% ahead of profile.
“The €302 million increase in income tax collected on the same period last year is real evidence of the number of jobs being created. This has been achieved despite the reductions in income tax and USC which I introduced in Budget 2015.
“It’s very hard to estimate how much ahead they’ll be for the rest of the year, but the trend is towards having all taxes ahead of profile,” he added.
