Dáil Éireann Debate, Thursday - 23 November 2023
109. Deputy Ged Nash asked the Minister for Finance the up-to-date figure in respect of corporation tax revenue recorded to November 2023; if he has reassessed the level of likely 'windfall' corporation tax surpluses out to 2026; if he will publish the revised figures as compared to the corporation tax estimates out to 2026 which were published in this year's summer economic statement; and if he will make a statement on the matter. [51428/23]
View answer117. Deputy Ged Nash asked the Minister for Finance his plans to broaden the tax base in the context of the State's reliance on a small number of tax heads including corporation tax and VAT; and if he will make a statement on the matter. [51429/23]
View answer132. Deputy Cormac Devlin asked the Minister for Finance how overall tax revenues to end-October this year compares to the same period in 2022; and if he will make a statement on the matter. [51397/23]
View answerI propose to take Questions Nos. 109, 117 and 132 together.
Tax revenues to end-October stood at €66.5 billion, €2.5 billion or 4 per cent ahead of the same period last year driven primarily by income tax and VAT. Income tax receipts to end-October of €25.7 billion were up by €1.8 billion on the same period last year, while VAT receipts of €17.0 billion were €1.6 billion higher than in the same period last year.
Corporation tax receipts recorded to end-October stood at €15.7 billion. This was down by €0.4 billion, or 2.7 per cent, on the same period last year. October has been the third consecutive month in which corporation tax has declined year-on-year, reflecting the weakness of exports this year, particularly in the pharmaceutical sector.
The next set of Exchequer figures will be published in the November Fiscal Monitor on Tuesday, 5th December.
The recent decline in corporate tax receipts underscores the volatility in this tax head: as Deputies will be aware, I have frequently warned that these receipts should not be relied upon to fund permanent expenditure measures.
As part of Budget 2024, my Department updated its estimates for ‘windfall’ corporation tax, in other words receipts that are not linked to the domestic economy. For this year, windfall receipts were estimated at €10.8 billion, rising to €11.1 billion next year. For 2025 and 2026 windfall corporation tax was estimated at €11.7 billion and €10.8 billion respectively, with the 2026 figure net of an assumed loss to revenues from the OECD BEPS reforms.
My Department will update its estimate for ‘windfall’ corporation tax, taking into account the most up-to-date information, including the final outturn for this year, as part of the full suite of macroeconomic and fiscal projections that will be published in the Stability Programme Update next spring.
This Government has taken significant steps to mitigate the vulnerabilities around windfall corporation tax; as part of Budget 2024, I announced two new long-term investment funds; the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.
These funds will invest windfall receipts to help part-fund the response to future structural fiscal challenges, including the impact of an ageing population, as well as to assist with funding infrastructure and climate-related projects, and will ensure that these receipts are not used to fund permanent spending commitments.
More generally, the risks around corporation tax reinforce the importance of implementing a broadly based tax system. Over the past decade or so, a number of important changes have been introduced to broaden the tax base, including the introduction of the Universal Social Charge and Local Property Tax, while significant progress has also been made in phasing out many tax expenditures.
Of course, the best way to ensure the stability of the tax base over the long term is by continuing to pursue a sensible fiscal policy that balances continued investment in our public services and infrastructure with the long-term sustainability of our public finances.
