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Rising house prices help fill the State's coffers by €1.5bn

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38,000 homeowners at least two years behind on mortgage payments

38,000 homeowners at least two years behind on mortgage payments

38,000 homeowners at least two years behind on mortgage payments

The sharp rise in house prices has helped fill the State's coffers by €1.5bn since the start of the year.

Latest Exchequer figures show revenue from stamp duty soared 29pc in the first 10 months of the year, helping to give the State's finances a further boost.

While some of the extra cash comes from tax on stock market exchanges, most of it is down to the increase in property prices and the jump in the number of houses being sold.

"These figures will doubtless bring a smile to the faces of the occupants of the Department of Finance," said Philip O'Sullivan, who is an economist at Investec Stockbrokers in Dublin.

"The figures show ongoing strong momentum."

Revenue from other sources, such as income tax and VAT, is also expanding strongly, giving the Government €1bn more than expected. While that money could be used to pay for the water charge, the Government is committed to bolstering the number of predictable taxes rather than stamp duty, which fluctuates wildly.

In another boost for the country, the European Commission predicted yesterday that Ireland will register the highest growth of any European Union economy this year, at 4.6pc.

Growth will fall to 3.6pc next year and 3.7pc in 2016, it said. But that will still leave Ireland with the fastest growing economy for years.

The Commission predicted the eurozone will avoid a new recession this year, but only just.

 

As the economy races ahead, the Exchequer figures show the tax take until the end of October was more than 9pc higher than the same period last year because consumers returned to the shops and thousands of people re-entered the workforce.

"The figures reflect the ongoing improvements in the labour market with more people at work translating into higher income tax receipts," said Peter Vale, who is a partner at Grant Thornton.

"The Government will hope that increased consumer confidence and greater spending power will ensure that tax receipts remain buoyant."

The strong Exchequer figures came as the State yesterday raised €3.75bn by selling bonds that will not have to be repaid for 15 years. The sale came less than two years after Ireland was effectively shut out of the bond markets and the economy was still contracting painfully.

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The country's quick growth will add weight to Finance Minister Michael Noonan's decision to introduce a relatively mild Budget for next year. However, it will also stoke fears that very low interest rates set by the European Central Bank in Frankfurt are leading pockets of the economy to expand at unsustainable rates.

The ECB is expected to say tomorrow that it will keep interest rates at close to zero and may even announce plans to effectively begin printing money.

Some economists also warn that we are still borrowing money to keep the lights on. Overall, the Exchequer deficit, which is the gap between government spending and income, is around €8.5bn, which is less than the €10.52bn seen last year but still an enormous sum.

The total tax revenue collected in the same period was just under €32bn, or €2.73bn more than last year. This 9pc increase was mainly due to a similar sized increase in income tax and VAT receipts.

The signs of a buoyant economy can be seen almost everywhere. Luxury car sales are rising quickly with sales of Land Rovers up by 31pc so far this year.

Dublin's residential and commercial property markets have seen some of the highest price rises in the world while 'help wanted' signs are appearing in shop windows.

The big question for the economy is what happens elsewhere in Europe. With so much of the eurozone struggling, economists warn demand for Irish-made goods could fall or we could even see a new chapter in the euro-area crisis.


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