Joe Flaherty
Question:19. Deputy Joe Flaherty asked the Minister for Finance the status of corporate taxation receipts to date in 2021. [44868/21]
View answerTuesday, 21 September 2021
Questions (19)
Written answers
The Exchequer has benefited from better-than-expected corporation tax receipts this year. As of August, the most recent available data, corporation tax receipts were €859 million, or 14 per cent ahead of target and up by some €524 million, or just over 8 per cent ahead of the same period last year.
This over-performance is significant, but would have been even higher were it not for the Covid Restrictions Support Scheme (CRSS). Up to end-August, some €452 million had been deducted from corporation tax receipts and paid to qualifying businesses under the scheme. The Exchequer at end-August received some €7 billion in corporation tax receipts.
I have said on many occasions that the strong growth in corporation tax has been welcome during this period: it has meant that we have to borrow less than we otherwise would. However, I have also frequently warned that these receipts are subject to exceptional unpredictability and volatility. Around half of corporation tax receipts come from a relatively small number of large, highly profitable firms. The concentration in the tax base represents a risk to the stability of the public finances.
The recent level of corporation tax growth will not continue indefinitely. Changes to the international tax environment represent a key risk to the public finances: as a result of ongoing negotiations, Government is planning for a substantial loss to corporation tax revenues: our current estimate is that €2 billion may be lost by 2025. There is still significant uncertainty about the nature of the changes and how the impact will manifest; the actual loss could be even higher.
As a result, I have regularly warned against funding permanent expenditure increases on the basis of this highly volatile and unreliable revenue stream. Government has set out a medium-term budgetary framework in the Summer Economic Statement; one of the key objectives of this is to minimise the risk of uncertain corporation tax receipts being used to finance permanent increases in spending.