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Amid pressure on Ireland, Donohoe 'won't speculate' on future position on corporation tax

In its Summer Economic Statement, the Government has revised Irish growth projections upwards.

Image: Sam Boal

MINISTER FOR FINANCE Paschal Donohoe has told an Oireachtas committee that he “won’t speculate” on what his final position will be on an international agreement that could end Ireland’s 12.5% rate of corporation tax.

Ireland has been one of a handful of countries so far to reject a proposal that would see over 130 countries adopt a 15% minimum rate of taxation for large corporations.

The United States is spearheading the international push behind the reforms.

Earlier this week, Donohoe met this week with US Treasury Secretary Janet Yellen who hopes to persuade Ireland — along with the other EU holdouts Hungary and Estonia — to back the deal.

Last night, The Irish Examiner reported that the Government is ready to ditch the controversial 12.5% rate and sign up the agreement to avoid becoming an “international pariah”.

But Donohoe told RTÉ’s Morning Ireland programme today that he will continue to make the case for Ireland’s low corporation tax environment until the process, which is being led by the OECD, formally concludes in October.

Questioned on his commitment to the current regime by Sinn Féin finance spokesperson Pearse Doherty this morning, Donohoe said he’s “well aware of the responsibility that’s on [his] shoulders”.

“I’ve proven my commitment to standing by our rate by virtue of the fact that we’re not in an agreement at the moment and in a minority of countries not in that agreement,” the minister said.

“I’m not going to speculate on what my final position could be in relation to an agreement that isn’t yet finalised. But my commitment to our rate is proven by where we are at the moment.”

Donohoe, along with Minister for Public Expenditure Michael McGrath, was answering questions from the Oireachtas Committee on Budgetary Oversight this morning about the Government’s Summer Economic Statement (SES).

Published last night, the SES upwardly revised Irish economic growth projections from April’s Stability Programme Update (SPU).

The Government now expects Gross Domestic Product — the total value of all goods and services produced within the economy — to grow by 8.75% in 2021, up from 4.5%.

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A larger-than-expected budget deficit — €20.3 billion as opposed to €18 billion — has also been pencilled for this year.

The Government now foresees large budget deficits until at least 2025 in a bid to boost capital investment, particularly in the area of housing.

Asked how much extra money will be available for housing in the upcoming Budget, Minister McGrath said the “precise figures” will be available once the Government’s Housing for All strategy is unveiled in the coming week.

“It will be the case that housing will be the big winner because we recognise that this is a top priority across society and an absolutely key priority for government,” he added.

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