Thursday, September 08, 2022

Around €1 in every €4 of all tax collected is corporate tax payments, the highest ever share, according to a new analysis of corporation tax.

The document published on Thursday by the Department of Finance said corporate tax receipts in Ireland have more than doubled in five years, raising legitimate questions regarding the sustainability of this revenue steam.

It said reliance on potentially volatile sources of income to fund permanent increases in public expenditure is not sustainable for the public finances.

The analysis suggests the potential corporation tax revenue at-risk last year could be in the region of €4-6 billion.

It said there is a case to treat a portion of corporation tax receipts as volatile into the future. De-risking the public finances in this way could involve replenishing the Rainy Day Fund or establishing a fund to finance an ageing population.

Minister for Finance Paschal Donohoe said: “The analysis published by my Department today highlights the risks associated with the recent upward shift in corporation tax receipts.

“Around €1 in every €4 of all tax collected originates from corporate tax payments – a figure which is exceptionally high in both historic and cross-country terms.

“To put it another way, just ten large corporation tax payers account for €1 in every €8 collected.

“The key message that flows from today’s publication is that a reliance on volatile sources of income to fund permanent increases in public expenditure is a potential blind-spot for the public finances.

“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.”

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