Economy still only in the group stages - Tax take up, but too early to cheer

It is standard footballing strategy to downplay a team’s ability in advance of a big game in the hope that the result will be better than forecast and the cheers of the supporters will be all the louder at the final whistle.

Now, nobody’s saying Finance Minister Michael Noonan took a leaf out of the football manager’s handbook when he predicted the tax take for 2015 at the start of the year.

However, it’s hard to deny that when the result is almost €3bn better than forecast, the temptation is to lift the roof off the stadium.

Indeed, there is something to celebrate in the fact that certain sectors of the economy are vibrant and profitable and contributing a healthy share to our starved State coffers.

When Vat receipts are also up it is a sign of returning confidence among consumers, too, which hopefully is well-founded.

However, €3bn would barely cover the cuts made to public services in just one of the budgets in just one of the crisis years since the economic collapse.

It is, therefore, a precious resource that must be used wisely and not showered on the fan with the biggest banner.

It also comes largely from a source of revenue, Corporation Tax, that is subject to fluctuations from global factors over which we have little control.

So, while the outlook is fairly bright on that front — or at least that’s what the steady stream of job announcements in recent months would indicate — it would not be prudent to make assumptions that this miniboom will continue unabated.

Then, there’s the fact that a fair chunk of the windfall is already spoken for. If downplaying revenue projections is becoming a habit in this Government, so too is underestimating expenditure in key areas.

Supplementary budgets for the Department of Health have become a hardy annual and Minister Varadkar hasn’t disappointed this year, presenting a demand for a €665m extension to his allowance, which the Cabinet signed off on yesterday.

That’s in addition to the €175m supplementary budget needed by the Department of Social Protection.

Already, the €3bn cake is displaying several large bite marks.

Also, we can’t forget that, as a country, we still owe every cent we make, with a debt-to-GDP ratio that continues to hover above 100%, though it just might drop a percentage point or two below by year’s end.

So, yes, the tax take is higher than expected and, yes, we have a surplus of revenue over expenditure for the first time since 2007 and, yes, there’s another month to go with the Christmas spending splurge still to get into full swing.

However, in the game of economic recovery, we’re still only in the group stages, so it would be premature to start predicting that we’ll be contesting any finals any time soon.

Anyone who calls to your door in the months ahead with a “vote for” badge in one hand and a guarantee of a pitchside seat to success in the other, needs to be shown a red card.