Fianna Fáil Spokesperson on Finance Michael McGrath has said data highlighting the concentration of corporation tax receipts from a small number of multinational groups in Ireland raises significant issues for the sustainability of the public finances and industrial policy that require careful assessment.
The data released to Deputy McGrath by way of a parliamentary question shows that, for 2016, the top 10 multinational groups paid 40.2% (€2.96bn) and the top 20 multinational groups paid 50.2% (€3.69bn) of all corporation tax.
Deputy McGrath commented, “Our success in attracting some of the world’s top multinationals to Ireland is something we should be proud of. We can’t assume that this success will continue, particularly in the light of the UK‘s commitment to cut their corporation tax rate to 17% by 2020 and plans from the Trump Administration in the US to cut their rate to a similar level. We need to continue to market Ireland as an attractive and open destination for inward investment.
“The data underlines the highly concentrated nature of our corporation tax receipts and certainly raises important issues about the level of dependence we have on the amount of tax paid by a very small number of companies. We need to recognise that being dependent on so few companies for such a large slice of our corporation tax take exposes us to a potential vulnerability and we have to plan accordingly.
“Across all the tax headings, Ireland is expected to collect €50.6bn in tax in 2017 with corporation tax anticipated to account for €7.7bn (or 15%) of the total. If the same concentration in corporation tax receipts occurs in 2017, then 6% of the country’s overall tax take from all sources will come from just 10 multinational groups.
“This is part of the reason why Fianna Fáil proposed the establishment of a ‘rainy day fund’ so that a portion of receipts from what is a volatile tax heading could be put aside as a buffer to cushion us against a future economic downturn. We are concerned at the reports the Government is considering abandoning these plans.
“Given that 80% of corporation tax receipts are typically received from foreign owned multinationals, we need to question whether we have got the balance right in our industrial policy between the multinational sector and indigenous Irish owned firms. We need to continue to work to support the multinational sector, but we also have to focus on developing improved supports and a better enterprise environment for Irish firms to grow and prosper,” concluded McGrath