Dáil Éireann debate -
Wednesday, 14 Mar 1990

Vol. 397 No. 1

Written Answers. - Direct Taxation.

Michael Ferris

Question:

23 Mr. Ferris asked the Minister for Finance the total amount of direct taxation paid by companies in 1989, expressed in cash terms, as a percentage of gross national product and as a percentage of the total tax take; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds)

Direct tax paid by companies, excluding the bank levy, was £309 million in 1989. This represents 1.5 per cent of gross national product and 4.1 per cent of total tax revenue for 1989. These figures are provisional and may be revised.

As I pointed out in the budget statement, the yield from corporate tax is low by international standards. In the league table of 22 OECD countries, our yield ranks lowest of all as a percentage of GDP and is less than half of the EC average. Throughout the 1980s the yield has varied between 4 per cent and 6 per cent of total tax revenue or between 1.5 per cent and 2 per cent of gross national product. Reforms in the corporation tax system were, however, initiated in 1988, principally by the halving of the accelerated capital allowances. These reforms have been continued in this year's budget proposals to eliminate the accelerated allowances from April 1992 and to limit the cost to the Exchequer of "section 84" lending. In addition export sales relief and "Shannon" exemption will terminate in a few weeks' time, and the overall effect will be to significantly boost the yield from corporation tax, particularly from 1992 onwards.