Paschal Donohoe: Policy caused tax take surge
Paschal Donohoe, the finance minister, has denied he was “lucky” to benefit from a doubling in corporation tax receipts since 2014, which allowed him post a €1.5bn surplus in the public finances for 2019.
Mr Donohoe, heralding the strong performance, said there was no luck involved as the increase in revenues came as a result of a change in policy driven by him and his predecessor Michael Noonan.
“The corporation tax surge is as a result of policy decisions,” he said. “There is no luck in the world of corporate tax policy. I have been in the middle of defending our corporate tax regime and changing it.
You don’t get lucky in this kind of world. It is as a result of policy choices we have made.
“I am claiming credit for a stable corporate tax regime. Since 2014 and 2015, we changed our tax regime in line with the OECD, and [when] we did that, we benefitted from more capital coming in.”
The latest exchequer returns show that the Government is likely to have generated budgetary surplus last year of 0.4% of gross domestic product (GDP) or €1.5bn on foot of the record €59bn tax take.
Figures published by the Department of Finance show that the over-performance in tax receipts will deliver a surplus double the 0.2% of GDP surplus set out on budget day.
Taxation receipts for 2019 amounted to €59.3bn, the highest level ever, and nearly €1.4bn above the original forecast.
“Across the main tax headings, receipts were in line with expectations with the notable exception of corporation tax receipts, which were €1.4bn ahead,” the department said.
Mr Donohoe warned that the country can’t continue to rely on the same strong corporation tax receipts.
He said: “I expect to see corporation tax receipts decline in the future — I believe that will happen.
I think we could see that happen for two different reasons: either international tax changes in ways that we can’t control, or levels of corporate profitability among some very big companies could begin to decline.
Sinn Féin finance spokesperson Pearse Doherty said the increased tax takings should not be used to fund current expenditure.
“The corporation tax surge is an unreliable phenomenon that should not be used to fill holes in the Government’s own budget, but instead to invest in the economy,” he said.
“The logical thing to do — in the face of unprecedented crisis in health and housing — is to divert any windfall into capital investment while it is coming in, and use this money to build homes, and to invest to build capacity in our public health system to address the challenges we face,” the Donegal TD added.
