Tax revenues have soared by ISK37.8bn (USD330m) while expenditures have only risen by ISK19.4bn (USD170m) as compared with one year ago for the small USD14bn Icelandic economy.
These figures are better than expected, and the country has cut its budget deficit from around 14% of gross domestic product (GDP) in 2008 to 2.3% of GDP in 2011 while also reducing its sovereign debt.
As compared with 2011, Iceland has especially collected significantly higher corporate income tax revenues. Value-added tax, property taxes and excise taxes on motor vehicles are also part of the reason why tax revenues have soared during the period, due to tax rises kicking in.
Following the 2008 financial crisis which brought Icelandic banks to their knees, the Icelandic government sought help from the IMF at a time when national banks needed to be saved, the country's deficit was at 14% of GDP and recession was threatening.
Under the bailout deal, Iceland committed to cut spending and it tightened its comparatively low corporate taxation, made the tax system more progressive by hiking taxes while safeguarding low incomes, and increased already high indirect taxes.