Tax revenues are now running €1.4 billion ahead of target thanks to a surge in corporation tax payments.

Exchequer returns for the first eight months suggest the Government is on course to end the year with €2 billion more in tax than anticipated.

The better-than-expected performance is likely to increase the clamour for tax cuts ahead of October’s budget.

The figures show total tax revenue stood at €27.3 billion in August, which was €2.4 billion or 10 per cent higher than last year.

The main driver was corporation tax, which came in at €3.3 billion, some 38 per cent or €912 million above profile.

The Department of Finance linked the strong out-turn in compay tax receipts to improved trading conditions here and abroad.

Income tax, the biggest tax heading, generated €11.2 billion, which was €146 million or 1.3 per cent ahead of target.

The figures show VAT, which reflects consumer spending, also came in ahead of expectations, taking in €7.96 billion, which was €107 million or 1.4 per cent ahead of forecasts.

Excise duty, which benefitted from car sales linked to the new 152 registration plates, was €3.3 billion, some €24 million or 0.7 per cent up on projections.

The figures pointed to a budget deficit of €1.3 billion between January and August, compared with a €6.3 billion deficit for the corresponding period last year.

Overall, the exchequer deficit stood at €1.3 billion at the end of August, down from €6.3 billion at this stage last year.

On the spending side, the figures show total net voted expenditure of €27.3 billion, which was €297 million or 1.1 per cent below profile.

The cost of servicing the Republic's national debt was €4.6 billion, which was down €293 million or 6 per cent on last year, reflecting the impact of the early loan repayments to the International Monetary Fund.