I propose to take Questions Nos. 233 and 234 together.
Corporation tax receipts recorded strong growth throughout the pandemic, increasing by almost €950 million last year to reach €11.8 billion, which was, at the time, the highest level on record. As of November this year, corporation tax receipts stood at €13.6 billion.
These receipts are welcome, and a reflection of the success of our industrial policy in attracting high-quality firms to Ireland. There is evidence that, in particular, the pharmaceutical and ICT sectors have contributed to the record level of receipts received over the last two years. The continued strength in corporation tax revenues means that we are borrowing less than would otherwise be the case.
However, as I have stated on many occasions, corporation tax receipts are subject to exceptional volatility and unpredictability because, as the Deputy notes, receipts are vulnerable to the business decisions of a relatively small number of large, multinational firms, with the top ten payers accounting for more than half of all receipts in 2020.
Additionally, Government is planning for changes to the international tax environment which may impact upon revenues. Despite the recent clarity offered by Ireland signing up to the political agreement at the OECD Inclusive Framework, at this point it is too early to make any determination on the net costs or otherwise of implementation. There are numerous issues that remain to be addressed, negotiated and resolved at OECD and EU level, as well as within signatory countries.
Given the absence of such relevant information, Budget 2022 forecasts maintained the previous assumption of a €2 billion net loss in corporate tax receipts by 2025 relative to baseline. This assumption will, of course, be kept under constant review and amended as appropriate as negotiations continue.
The volatility and unpredictability of corporation tax receipts underlies the importance of the medium-term framework set out in the Summer Economic Statement, which anchors budgetary policy via an expenditure rule. Keeping core spending growth in line with the trend growth rate of the economy will help ensure that expenditure policy is de-coupled from windfall tax revenue, such as any potential over-performance in corporation tax receipts in the years ahead. This will assist in reducing the over-reliance on corporation tax receipts going forward.
Finally, I have noted the Irish Fiscal Advisory Council’s recommendation in its Fiscal Assessment Report in relation to the Rainy day fund and I will take this advice under consideration.
I will formally respond to the Fiscal Assessment Report in the coming weeks.