Ireland's tax take will rise by five percent next year, the country's finance department predicted on Saturday, just days before it will test a fragile economic recovery with the harshest budget on record.
The Irish government intends to make a whopping 6 billion euros in savings next year -- a prerequisite for ensuring quick access to EU/IMF rescue funds -- and will look to achieve a third of the adjustment through tax hikes.
With tax receipts for the first 11 months of this year 1.5 percent ahead of the ministry's targets, it sees next year's pre-budget tax revenue rising to just over 33 billion euros thanks to improvements almost across the board.
However some economists and opposition politicians have warned the 6 billion target could choke the modest 1.75 percent growth in gross domestic product (GDP) growth pencilled by the government next year.
The ministry will likely downgrade their forecast regardless early next year to take account of the budget. It revised this year's figure down by almost 1 billion euros last February after 4 billion euros of spending cuts and tax increases were made.
Highlighting the priority to make two-thirds of next year's savings through expenditure cuts, the finance ministry also projected that day-to-day government spending would increase by 3 percent to 42 billion euros were no measures introduced.
Despite unemployment showing some signs of stabilizing at just under 14 percent, next year's social welfare bill -- the highest area of spending -- is projected to rise by 1 billion euros with education costs set to increase by almost half that.
Health care spending -- another big area set to be in the firing line at next Tuesday's budget announcement - is actually forecast to decrease slightly next year on a pre-budget basis.
The ministry set Ireland's pre-adjustment budget deficit forecast for next year at 12.2 percent but have projected that next year's savings will reduce it to between 9.25 and 9.5 percent en route to an EU-agreed target of 3 percent by 2015.
(Reporting by Padraic Halpin; Editing by Andrew Hay)