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Irish tax take is 5.4 pct above target as corporate tax surges

DUBLIN (Reuters) – Ireland’s tax take rose to 5.4 percent above target at the end of August as corporation tax receipts came in more than a third higher than expected, leaving the government on course to beat its year-end deficit target.

The tax take was 1.4 billion euros higher than forecast, up from a 900 million-euro surplus in July. Government spending in the first eight months was 1.1 percent or almost 300 million euros lower than expected, the finance department said.

While more tax was collected than had been expected in all areas, corporation tax accounted for more than 900 million euros of the outperformance, which the finance department primarily put down to improved trading.

“The recent strong economic and jobs data, coupled with the strong exchequer performance to date, means we are well on track to exceed our targets for 2015,” Finance Minister Michael Noonan said in a statement.

Noonan said the fact that the tax take was up 10 percent or almost 2.5 billion euros year-on-year, even after he cut income tax rates for the first in years, demonstrated the underlying strength of an economy that is the fastest growing in Europe.

That left the exchequer posting a deficit of 1.29 billion euro at the end of August versus a deficit of 6.3 billion at the same point last year. If one-off items are excluded, the deficit would come in closer to 3 billion euros.

Noonan said in July that the 2015 budget deficit may fall below the 2.3 percent of GDP forecast, well below the EU’s 3 percent year-end limit, and also told Reuters this week that his department will raise its economic growth forecast for 2015 when it updates figures next month.

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