By Padraic Halpin
DUBLIN (Reuters) - Ireland came close to balancing its budget at the end of 2015 as a costly bank bailout wound down and tax revenues surged.
The government trimmed its forecast for the 2015 deficit last month to 1.7 percent of gross domestic product from 2.1 percent, thanks to a booming economy and a surge in tax paid by Ireland's cluster of multinational firms.
The government now says it can eliminate a deficit that was the highest in the euro zone six years ago before the target of 2018 that it agreed with the European Union. Including one-off items, it cut the budget gap to 62 million euros (45.42 million pound) at year-end from 8.2 billion in 2014.
Excluding non-recurring items such as December's recouping of 1.6 billion euros from state-owned Allied Irish Banks (I:ALBK), the deficit would have been around 3 billion euros, the finance department said.
With Ireland's economy set to be the fastest growing in the EU for a third straight year in 2016, Goodbody Stockbrokers forecast that the deficit might be eliminated this year.
The state collected 7.8 percent, or 3.3 billion euros, more tax than expected in 2015, mostly from corporation tax receipts over the year and a sharp monthly rise in income tax and excise duty in December, the figures showed.
Corporation tax accounted for 70 percent of the year's surplus and exceeded the annual peak of 6.7 billion euros collected in 2006, before Ireland's financial crisis forced the state into a three-year international bailout in 2010.
Tax collectors have said the rise in corporate tax is sustainable while the 7 percent year-on-year increase in income and value-added tax receipts pointed to a broadening recovery in the domestic economy.
Government spending for the year was 2.8 percent, or 1.2 billion euros, higher than expected. Spending was under budget for the first 11 months, but the government committed in October to divert 1.5 billion euros of the tax windfall into additional spending before the end of the year.