There has been a strong surge in the amount collected in income taxes during April, reflecting renewed buoyancy in the labour market.
Exchequer Figures for April, published this evening, show that workers paid €750m income taxes last month alone. Income tax receipts are growing twice as fast as predicted in the budget.
When all taxes headings are taken into account this evening's Exchequer figures reveal the Government took in €514m more than expected in taxes in the first four months of the year.
Overall, the country recorded an Exchequer deficit of €1.3 billion in the four months to April, compared with a deficit of €1.7 billion the same time last year.
Today's latest figures from the Department of Finance are strong and confirms yet again that our economic performance is continuing to improve.
Most notable during April is a strong surge in income taxes paid mainly by workers. Their contribution to the Exchequer is up by €750m in just one month. It brings the income tax total since the start of the year to just over €3 billion. That is almost 20% more than this time last year and is twice the increase targeted in the budget.
The surge in income taxes receipts reflects continued strength in the labour market as well as more solid wage growth than some had expected.
There was also good news for the Government in relation to other taxation categories. Shortfalls that had been evident in excise duty and VAT receipts have been eliminated. Also capital taxes, which are paid on profits from the sale of assets like shares, businesses, and non-residential property, continue to grow at double the rate expected.
The figures also show that Government Departments are significantly slower than expected when it comes to spending their allocations for this year. Overall Government spending is running €583m behind target. Overall investment in infrastructure accounts for just over half of the under spend.
However, despite the buoyant taxation trends, the Government still had to borrow €1.3 billion to balance its finances in the first four months or this year. But this was still €400m less in borrowing during the same period in 2003.
This evening's figures are likely to add to economic confidence in the weeks ahead. They show our public finances continue to be well behaved and that consumer spending and earnings are back on track.
However, the surge in income tax receipts could fuel debate about whether Finance Minister Charlie McCreevy was too tight in last December's budget when he refused to index personal taxation in line with inflation.
