A revival in economic growth and the strong property market are boosting tax revenues, which are running more than €300 million ahead of target in the first quarter.

Together with low spending increases, this turned a deficit of €205 million in the first quarter of last year into a surplus of €272 million this year, leaving the Minister for Finance, Mr McCreevy, well on target to meet his Budget projections.

Overall tax revenues of €8 billion in the first quarter were 15 per cent ahead of the same period last year and 4 per cent up on the target for the period.

The main areas of strength are capital gains tax and stamp duty, which combined are €275 million ahead of target.

The big tax headings of income tax and VAT are running close to target, while corporation tax receipts are a bit ahead of expectations.

The buoyant property market appears to be a key factor in the figures. Rising prices and an active residential market are boosting stamp duties.

Housing-related activity also appears to be pushing up capital gains tax. Receipts received in the first quarter relate to asset sales towards the end of last year and the buoyancy appears to be driven by land sales and transfers of investment property.

Strong stock markets last year may also have encouraged share sales, further supporting capital gains tax.

While other tax headings are closer to target, they are still well ahead of last year, indicating steady overall economic growth. Income tax receipts are almost 14 per cent up on last year, while VAT is 5.6 per cent a ahead.

Spending, meanwhile, is running below target, with total voted expenditure of €7 billion at end March coming in €379 million below the planned level.

Both current and capital spending were well below target in the first quarter. The shortfall is particularly marked on the capital side, where spending is running 1.4 per cent below the same period last year.

However spending figures - particularly on investment projects - can be heavily affected by timing factors and Department of Finance officials say that spending plans are broadly on target.

The shortfall on capital spending so far is mainly due to lower-than-expected spending by the Departments of Environment, Heritage and Local Government and Transport, according to the Department.

The figures "suggest that we are on course to meet our public finance targets for 2004", according to Mr McCreevy.

However he cautioned in a statement that "it is too early to be definitive about the likely trend". This would depend on continued economic recovery and the actual evolution of tax trends.

The Government "remains fully committed to staying within its spending targets", Mr McCreevy added.

Stock market analysts believe that the Minister is on course to undershoot his Budget target significantly. Mr Jim Power, chief economist at Friends First, said that Exchequer borrowing could come in up to €1.5 billion below the €2.8 billion target.

Department officials say that the figures are consistent with an economy starting to recover.

The main plans are on track in the tax figures, they said at a briefing.

The Department will not speculate on the likely receipts from the Revenue Commissioners scheme to attract undeclared money from offshore tax accounts.

"The extent of our embarrassment at having extra cash is tempered," commented Mr Philip Hamell, head of the finance directorate in the Department.

While the amount of the revenue will affect the borrowing outcome for the year, the Department will highlight that it is a once-off receipt.