€316m tax windfall 'hoarded as election slush fund'

FINANCE Minister Charlie McCreevy yesterday welcomed an extraordinary set of Exchequer figures but was rounded on the opposition for "hoarding" the tax bonanza to be used as a pre-election slush fund.

Prior to opening the informal meeting of European finance ministers (ECOFIN) at Punches-town, Co Kildare, yesterday, Mr McCreevy announced the Government took in €316 million more than predicted through taxation in the first quarter of 2004.

The Exchequer figures also showed Government departments spent €416m below budget in the first three months of 2004.

The budgetary balance sheet to the end of March shows a surplus of €271m compared to a deficit of €207m this time last year.

However, Mr McCreevy displayed his usual caution in responding to the figures and warned it was to early to be confident this trend would continue.

The main factors behind the high tax take are continued strong surges in capital gains taxes and stamp duty. Combined, they are €275m above target.

And the Revenue Commisioners' tax take should be considerably boosted over the next two months by the €1 billion-plus windfall from almost 10,000 people who declared non-resident and offshore accounts by the deadline date of March 29.

However, the opposition was scathing of the Finance Minister's reluctance to plough the surplus funds into the economy.

Fine Gael's Richard Bruton said the €316m should be used to pay off the national debt. He claimed it would be retained and used by ministers as a pre-election slush fund.

In a pointed reference to the ECOFIN, Mr Bruton said the Punchestown centre showed that ministers were incapable of getting value for money for taxpayers in their spending programmes.

Labour finance spokeswoman Joan Burton argued the Government was building an election war chest while vital services were being cut back. "Today's Exchequer figures show up the futility of damaging cuts inflicted on public services by the Government," she said, pointing out the cuts amounted to only €58m, a fifth of the current surplus.

Mr McCreevy and EU Commissioner Pedro Solbes said the tentative recovery of European economies should gather momentum during 2004, helped by the global upturn and better domestic demand.