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Minister Donohoe publishes new analysis on Corporation Tax

The Minister for Finance, Paschal Donohoe TD today (Thursday) published an analysis by his Department entitled De-risking the public finances – assessing corporation tax receipts.

The purpose of the document is to highlight the fiscal vulnerabilities stemming from the upward shift in corporation tax receipts, part of which could potentially be lost into the future.  The analysis set out in the document builds on Addressing Fiscal Vulnerabilities, published by the Department of Finance in October 2019.

Commenting on the analysis set out in the Report, the Minister 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.

Ends

Note to editors:

The earlier document Addressing Fiscal Vulnerabilities is available at:

https://assets.gov.ie/180895/84ddd029-9925-4464-829b-8470079f5d9a.pdf

As recommended by the Irish Fiscal Advisory Council and the European Commission, the Department of Finance will publish a new measure of the general government balance, excluding potentially transitory or ‘windfall’ receipts (GGB*).

The Rainy Day Fund was initially capitalised with a €1.5 billion transfer from the Ireland Strategic Investment Fund; however the fund was liquidated in 2020 during the pandemic.

The National Pension Reserve Fund (NPRF) Commission was dissolved on December 31st 2021 with no assets remaining in the fund.