UNEXPECTED surges in VAT and income tax gave the Government a boost in the first three months of the year.
The tax take is already €351m ahead of what was expected by this stage, after a 10pc rise in revenues compared to last year.
However, there was concern expressed by the Department of Finance about spending on social protection and health.
The Exchequer Returns for the end of March show tax revenues were €809m better than planned. But €251m came from corporation tax payments from last year, which were not included in 2011 figures, and another €207m was a technical change to the way income tax is excluded. Once these payments are excluded, the tax take is still €351m ahead of target. VAT was also €101m better than expected, despite the 2pc increase announced in the Budget. Compared to the same period last year, the deficit is €2.8bn lower.
The deferral of a payment due on Anglo Irish Bank debt helped the Government's case.
The Exchequer figures got a broadly positive reception from economic commentators.
Bloxham Stockbrokers economist Alan McQuaid said the Exchequer returns and the higher level of tax receipts for the first three months were encouraging.
"If this trend in revenue is maintained over the remainder of the year, then the official 2012 deficit goals should be met if not bettered," he said.
But Mr McQuaid advised against further austerity measures. "More austerity than is absolutely necessary would in our view send the economy backwards instead of forwards as required at this juncture.
"The onus now should firmly be on promoting growth not dampening it further," he said.
Tax partner at accountants Grant Thornton, Peter Vale, also said imposing a further €400m of new cuts, as advocated by the Fiscal Council, was the wrong way to go.
"The fact that these VAT figures are not higher shows just how difficult it will be for the Government to raise any additional tax revenue as the Fiscal Advisory Council indicated would be required.
"It is not possible to tax your way out of a recession and these figures are an indication that we have potentially run out of road when it comes to tax increases," he said.
Chambers Ireland said the strong tax revenue growth was a positive sign, but it had concerns about the Government's ability to hold current spending within its target for the year.
The organisation's chief executive Ian Talbot said raising taxes and maintaining spending on public servants' pay and pensions would not keep spending in check.