REVENUE COLLECTED THROUGH corporation tax has doubled in the last five years, according to a new analysis from the Department of Finance.
This new analysis suggests that €20 billion may be collected in corporate tax receipts, meaning that around €1 in every €4 of tax collected was coming directly from corporate tax.
It also found that €1 in every €8 of tax collected was from ten of the biggest corporations operating in Ireland.
The analysis from the Department says that there may be a ‘fiscal hole’ of between €4 and €6 billion, with the Government now set to announce estimates of budgetary position excluding corporation tax receipts, which will now be viewed as a windfall.
The Department itself is concerned around the “sustainability” of continued corporate tax receipts, saying that a reliance on a potentially volatile source of income is unsustainable.
Speaking to reporters this morning, Finance Minister Paschal Donohoe said:
“It’s very possible that the level of corporate tax receipts for our country could be effectively twice of the levels that we heard before COVID-19
“This level of increase and a shift of this magnitude just has to inform our thinking regarding the future and regarding what could happen if those corporate tax receipts were to fall or if they were to not increase at the rate in which they’ve increased in recent years.”
Donohoe said that it was a risk for the “medium term” and said that it was something that the Government would be able to manage.
He added that there was now a strong argument to treat all corporation tax as volatile in nature.
“In my view, there is a strong argument to treat a portion of corporation tax receipts as volatile in nature. In doing so, we can address a key risk to the public finances and thereby help ensure our country’s fiscal sustainability,” said Donohoe.
To embed this post, copy the code below on your site
have your say