Fianna Fáil Finance spokesperson Michael McGrath has said a long term strategic approach is needed in how the State uses the continuing very strong corporation tax receipts including the establishment of a “rainy day” fund to cushion the effects of any future shock in the economy.
Today’s Exchequer figures show the state took in €774 million more in taxes in the first five months of the year than the government expected. 63% of the outperformance came from corporation tax receipts. This follows the trend of very strong corporation tax receipts in 2015 when the state received a massive €2.3 billion more than expected.
Deputy McGrath commented, “Fianna Fáil welcomes the strong exchequer figures for the first five months of the year, with the trend of buoyant corporation tax receipts once again to the fore.
“However the risk associated with treating corporation tax receipts as permanent can be seen from the fact that the top 10 multinationals account for about a quarter of overall corporation tax revenue. The top 50 multinationals pay about half of all corporation tax. Should international trading conditions deteriorate, this revenue stream will inevitably come under pressure.
“Now is the time to start planning for any unexpected shocks in the future. On current trends we could have over a €1 billion in extra corporation tax receipts this year; there is an obligation on the State to deploy this in the best long term interests of citizens.
“In the course of negotiations with Fine Gael, Fianna Fáil secured a commitment that a rainy day fund be established. We will be pressing the Minister for Finance to make good on this commitment in the run up to Budget 2017,” concluded Deputy McGrath.