Spending boom ‘startles’ finance chiefs

THE red hot property market and spending on luxury goods powered the Irish economy forward last year at a rate Finance Department chiefs admitted left them “startled”.

The expected exchequer deficit for 2005 of nearly €3 billion was slashed to €499 million as consumers splashed out wildly.

Tax receipts soared €1.75bn above estimates. The housing boom was largely responsible, with stamp duty and capital taxes accounting for 60% of the surplus.

Levies on cars swelled exchequer coffers by €108m more than expected, with tobacco adding €80m.

Government expenditure was up 9% but was still €705m less than expected.

Despite the increase in the numbers at work, income tax was just €161m above estimates.

Finance Department chiefs admitted they called the housing market wrong and the expected cooling had not materialised.

Philip Hamell, head of the Department of Finance’s Finance Directorate, said: “In line with other commentators we anticipated an easing of the property market and it didn’t happen. Estimates of spending by individuals we don’t control - that’s a free society. Where we do control spending, our estimates have generally been pretty good.”