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Exchequer returns fuel hope of beating deficit targets

Latest exchequer returns have raised hopes Ireland may beat its 2.7% of GDP budget deficit target for 2015.

The Department of Finance yesterday reported the generation of nearly €6.74bn in tax revenue for the first two months of this year, almost 16% up on the same period last year and 5.4%/€345m ahead of forecasts made in the last budget.

The figures also mean that the exchequer deficit amounted to just €205m as of the end of last month, compared to a deficit of €1.68bn at the same point last year.

Conall MacCoille, chief economist with Davy Stockbrokers, said the latest data provides “tentative evidence” that the Government may beat this year’s deficit target.

“Just two months into 2015, tax revenues are beating budget forecasts across a broad range of categories.

“Spending discipline is being maintained for now, after significant over-runs last year,” he said.

Macroeconomic data on economic performance indicates growth is being maintained and tax revenues are already €450m ahead of target, close to 0.25% of GDP, he said.

February’s exchequer returns saw good gains in most of the headline categories, including income tax and Vat, while capital gains and capital acquisitions tax receipts were each down annually.

Local property tax receipts were €115m, up nearly €60m year-on-year, but mainly due to a change in payment deadlines.

“February is a quiet month for Vat so the figure of most interest is income tax receipts. These continue to remain buoyant, evidence of both more people at work and higher earnings,” said Grant Thornton tax partner Peter Vale.

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