Treasury surplus reaches £1 billion

By Andrew Bushe

DUBLIN — The consumer spending boom is leaving Irish government coffers awash with cash. In the first three months of the year, there was an unprecedented Exchequer surplus of more than £1 billion — more than three times higher than in 1999 and a record for a single quarter.

In the fist quarter, the government took in £1.009 million more than it spent, compared with a surplus of £287 million for the same period in 1999.

A surplus of £1,609 million had been budgeted for the year as a whole but now it appears with will be well over £2 billion.

The government also received another £1.138 million from the sale of Eircom which has been allocated to future state pension liabilities.

Finance Minister Charlie McCreevy said the cost of substantial tax concessions in his budget last December would reduce receipts later in the year.

"Celebrate," the minister said as he reaffirmed he will continue to give tax cuts despite warnings from some experts that he should slow down the economy.

"The tax revenue receipts reflect the strong growth in the economy which is evident from recent statistics, including the reduction in unemployment and the very high level of retail sales, particularly car sales.

"The underlying tax prospect is positive. Based on trends to date, tax revenue for the year as a whole could exceed the budget target by as much as £500 million."

According to experts in the motor trade, sales of new cars this year are expected to be at least 230,000. In 1997, just 55,000 cars were sold.

The huge sales momentum is the result of consumer confidence, low interest rates making money cheap and the fact that many returning ex-pats are in the 20 to 30 years age groups.

In the first quarter, 104,391 cars were sold and there has been no sign of any slowdown in the initial rush to get new 00 millennium registrations in January. In March, 32,276 cars were sold — up 45 percent on the same month last year.

The car sales boom brought in vehicle registration tax (VRT) of £279 million in the three months.

Overall tax inflows, at £4,609 million, were almost 23 percent above the budget target.

Income-tax receipts were up nearly 14 percent compared to last year — three times higher than had been forecast in the budget.

VAT receipts were up 21 percent and capital gains tax earnings were up 61 percent.

The continuing house sales surge is reflected in the stamp duty tax increase of almost 28 percent — more than 6 percent ahead of target.