About a third of the bounce in 2018 corporation tax revenues linked to 'once-off' factors
A report by the Revenue on surging corporation tax revenues has re-sparked political concerns that Government spending relies too much on once-off revenue bounties.
A small handful of foreign-owned multinationals account for the bulk of the corporation tax receipts collected by the Government, the Revenue report again shows. That corporation tax receipts account for almost a fifth of all tax receipts the Government collected in 2018 is well known, but the Revenue analysis adds new details.
It shows that over a third of the €2.2bn increase in corporation tax revenues in 2018 was due to “once-off” reasons — €350m of the increase comes from changes to a global accounting standard, and a further €350m of the increase, it believes, is also “once-off in nature”.
The 10 largest payers accounted for over €4.6bn, or 45% of the €10.4bn paid in corporation tax last year, up from an already high share of 39% in 2017, the analysis shows.
And multinationals accounted for over three quarters of all corporation tax receipts, according to the Revenue report. It said it has drawn up three new categories of payers, including Irish-owned multinationals, foreign-owned multinationals, and non-multinationals.
However, the top payers are not named by the Revenue report or have ever been identified by the Department of Finance or any other government agency, which have long cited confidentiality reasons. The Government has been repeatedly warned by economists, including the Irish Fiscal Advisory Council and the Economic and Social Research Institute, against relying on funding day-to-day and capital spending programmes on potential unsustainable sources of taxation such as corporation tax.
Finance Minister Paschal Donohoe last year injected €700m in a supplementary budget to cover overspending in the day-to-day health budget. Opposition parties said that the Revenue report heightens their concerns.
“Making permanent expenditure commitments on the back of receipts that may prove to be temporary is a risk we need to avoid,” Fianna Fáil finance spokesperson Michael McGrath said.
Sinn Féin’s Pearse Doherty said “the over-reliance on corporation tax receipts for day-to-day spending despite the multitude of warnings is completely reckless”.
The chairman of the Revenue Commissioners, Niall Cody, said the finance minister doesn’t want to rely on corporation tax to fund spending.
“Anything that jumps like that, if there’s a drop, the Government has to be prudent,” he told RTÉ Radio.
