Analysis:In simple terms, the Government is €5.2 billion better off at the end of 2006 than it had expected to be. Presenting what were, in his own words, "outstanding" full-year exchequer figures showing a overall surplus of €2.265 billion, Philip Hamell, the head of the finance directorate at the Department of Finance, said every area of taxation had come in ahead of forecast.
In total, the State collected €3.9 billion more in tax last year than it had expected, much of it driven by the continuing boom in property.
Quite what credibility should be attached to the original estimate is a moot point. Rather than the 36 per cent increase in stamp duty recorded in yesterday's exchequer statement, the forecasts on budget day in 2005 foresaw a decline in revenue from this source.
Property accounts for roughly 80 per cent of stamp duty receipts. While many people anticipated a slowdown in the rampant rate of house price inflation last year, only the most pessimistic expected the standstill position that the department arithmetic indicates.
The same holds true for capital gains tax, for which a rise of just 3.8 per cent was pencilled in by the department. In the event, CGT returns came in 58 per cent ahead of schedule. Again, property accounts for a significant portion of CGT receipts - around 32 per cent. The bulk of the rest is accounted for by equities (40 per cent) and agricultural and development land (21 per cent) - all areas likely to grow in a buoyant economy that the department itself expected to grow by around 4.5 per cent.
As recently as last month, when the 2007 budget was presented to the Dáil, the Government expected an end-year surplus of €1.85 billion -€411 million or 22 per cent less than the eventual figure. Tax receipts came in €87 million stronger than anticipated four weeks ago, almost entirely due to income tax. On the other side of the equation, spending continued to undershoot targets.
The result is an exchequer in rude health in an economy that is generally expected to again lead EU peers in terms of growth this year.
IIB chief economist Austin Hughes notes that the particularly strong tax receipts in the latter part of 2006 could lead to pressure for an increase in pre-election commitments as campaigning begins in earnest.
That could prove a dangerous move. Last year's projected deficit was predicated on tax receipts of 6.1 per cent. In the event, tax returns came in 16 per cent ahead of 2005 levels. This year, the department has adopted a more confident stance, pencilling in a 9 per cent increase in tax revenue and a deficit target of around €546 million.
While most economists expect a surplus at the end of 2007, there is near unanimity that growth in tax receipts will ease.
Already, the first tentative signs of a slowdown in the property boom are emerging.
The mandarins may finally be close to getting their figures right.
The Minster, who yesterday hailed his Government's "prudent" approach to the nation's finances, will need to remind his electioneering colleagues that they must not budget on the exceptional property market that has largely driven tax revenue growth in recent years.
