Fianna Fáil Spokesperson on Finance Michael McGrath has today called on the Minster for Finance to commission an independent report on the sustainability of Ireland’s corporation tax receipts.
Deputy McGrath raised the matter with Minister Paschal Donohoe at this afternoon’s meeting of the Budgetary Oversight Committee.
Deputy McGrath commented, “Corporation tax receipts for 2018 surpassed €10 billion for the first time in the country’s history. The health of our public finances is now heavily dependent on these receipts and it is proving increasingly difficult to forecast with a degree of accuracy how much we are likely to collect from this stream of taxation.
“This dependence on one volatile source of revenue is a risk to our finances and the wider economy. According to most recent analysis from the Revenue Commissioners, almost 40% of corporation tax receipts are from just 10 companies. 80% of the 2017 corporation tax receipts were paid by foreign owned multinationals. We now need to fully ascertain how sustainable these receipts are into foreseeable future.
“A Review of Ireland’s Corporation Tax Code was commissioned in 2016 and Seamus Coffey submitted his report to government in June 2017. This comprehensive analysis of Ireland’s corporate tax regime covered, among other things, the sustainability of our corporation tax receipts. That report concluded that the “level-shift increase in Corporation Tax receipts in 2015 can be expected to be sustainable over the medium term to 2020”. Since the report was completed, corporation tax receipts have increased by over 40%.
“It is clear that we need a new independent report to critically examine the sustainability of these receipts beyond 2020 and to bring forward proposals to mitigate against the risk of a sudden loss of tax revenue. Fianna Fáil called for the establishment of a Rainy Day Fund to deal with such a situation and we negotiated this into the Confidence and Supply Arrangement. Thankfully, the legislation to establish the Rainy Day Fund is being brought into the Dáil this week.
“Corporation tax is among the most volatile tax headings and it is critical that we are fully prepared for any changes in the revenue taken from it. I call on Minister Donohoe to commission a follow up report to the Coffey Report that will assess the sustainability of Ireland’s corporation tax receipts beyond 2020”, concluded McGrath.