Record Tax Revenue for 2021

Ger Roe

So, Paschal O'D has an unexpected tax windfall of €68.4 Billion to play around with (the largest amount ever) for 2021.

This world beating achievement was delivered at a time when due to Covid, businesses shut down and many people were out of a job for significant periods of time. And yet ... treasure Ireland beat the odds. A report on RTE Radio 1 news today, says that over half of the record take, was generated by ten companies, mainly our multinational tech and pharma friends. It seems that as long as we remain friends with them, it doesn't really matter a lot, what the rest of us mere mortals do to contribute to society as productive citizens.

Is this not the leprechuan economics that we were warned about in 2016 when it was pointed out that we were overly reliant on foreign investment and associated activity?. I know it seems to have got us out of a hole during Covid, but is it sustainable in the long run, particularly when the game has been called on our tax deal arrangements (yet to be enforced).

For the non multinational employee on an average industrial wage, it means we are paying a shed load of direct and indirect tax (plus carbon penalties and most recently MUP on alcohol) for constantly decreasing public services at a time when our young people can't afford to rent or buy a home and the money left in our pockets is effectively worth less through rising inflation.

I remember the last time we were beating tax records and proclaiming that we were a powerhouse economy and that didn't work out too well for us. What advantage will this record windfall bestow in these new 'Celtic Tiger 2' economic circumstances, for the average citizen?

MTU

Johnny cash sales are booming also.

Dempo1

What's really telling is how dependent the country is on a relatively small number of multinational companies for that revenue.

If you think most of the domestic economy, retail, hospitality etc has been practically at a stand still for over a year, also more and more spending on line so that's not much use re vat income etc.

dxhound2005

Without checking, my recollection of the report I heard on the radio, said that the tax intake was about €7 billion below our expenditure. With welfare taking up about €30 billion on its own. And over €20 billion on health.

head82

Was surprised to hear Paschal O'D acknowledge on Claire Byrne a few minutes ago that revenue from the multinational companies are expected to drop in 2023. For a country that's so reliant on this revenue, that's a worrying thought and doesn't bode well for the immediate future.

Claire didn't bother to pursue him on the potential implications of this.

Yes, I think we are in a very precarious economic position, having all our eggs in the one basket. All it would take is one single, as yet unforeseen, circumstance for the big pharma and tech to relocate.

We think we are a nation of brilliant, highly educated individuals that these companies are reliant on. Guess what, the rest of the world is getting educated too, the very technological resources a lot of these companies provide are enabling global education, so the “people factor” may no longer be so relevant. The Irish Government has been careful not to scare off these companies by messing with tax incentives, but if or when other countries start becoming equally attractive from a financial & infrastructure point of view, we could face competition. Yes, we have a great climate for data centres, but take the cooler climates further north, there are equally good locations in that respect.

So we should not be so complacent and need to diversify our economy to protect against any nasty surprise coming down the tracks.

Geuze

https://www.boards.ie/discussion/2058226197/record-tax-revenue-for-2021

Our dependency on CT is a worry, yes.

Effective direct income taxes on typical workers are not high.

Public services are not "decreasing".

By the way, the figure 68bn is tax, that excludes PRSI revenues.

Zebra3

Not much use having record tax income when you’ve turned the state into such a heavily indebted entity.

spuddy

We collected about ~€5bn in corporate tax receipts in 2014, and ~€15bn in 2021. We get most of that revenue from a handful a firms, many of whom have boomed during the pandemic. When their profits take a nose dive, our revenue will too. We're exposed, and it is only a matter of time before it hits us.

In non-Covid times we should not use that additional revenue for day-to-day spending. The €10bn should either be going into additional infrastructure to make the country more efficient/attractive (we should be investing in infrastructure anyway without those funds so this would be on top of that baseline), or a sovereign wealth fund to build wealth for the future (like Norway has done with its oil reserves).

It avoids complacency creeping in around the additional revenue, the personal budgeting equivalent of "paying yourself first", which prepares the country for the inevitable.

Geuze

Tax revenue = 68.4bn

Total Govt Revenue = 98.2bn

Total Exp = 105.6bn

I see that CT is as big as VAT by now.

CT has soared, from 4bn in 2010-2013 to over 14bn now.

dxhound2005

https://www.boards.ie/discussion/comment/118426027#Comment_118426027

Not nearly as indebted as many other countries. And I don't think there is any country which is not in debt. It seems to be a core feature of capitalism. It would be foolish to pay off the debt, when loans can be renewed at ever lower interest rates.

If we were debt free in the morning, I doubt if any of us would notice much difference in our daily lives.

https://twitter.com/seamuscoffey/status/1478766608504037387/photo/1

https://pbs.twimg.com/media/FIWiJvaWUAEWggU?format=png&name=900x900

Geuze

https://www.boards.ie/discussion/comment/118426060#Comment_118426060

See page 32.

https://www.ntma.ie/uploads/general/NTMA-Investor-Presentation-December-Website.pdf

Debt to GDP is not high, correct, but GDP is inflated.

If we use the ratio (GG debt/GG revenue), then our public debt levels are the 7th highest in the EU, and are not low.

While it's true that the interest bill is low, I am not sanguine about the level of public debt.

https://www.boards.ie/discussion/comment/118426060#Comment_118426060

Pardon?

https://www.ntma.ie/business-areas/funding-and-debt-management/statistics

http://www.financedublin.com/debtclock.php

That diversion between GDP and GNP debt ratios is a major red flag that nobody official wants to address and even GNP value is skewed artificially by presence of multinationals. trueecononmics blogspot discussed this at length.

Ubbquittious

Great news hopefully they will finally be able to get rid of property tax and USC now as well as reducing the VAT rate

dxhound2005

https://www.boards.ie/discussion/comment/118426147#Comment_118426147

And if we halved that, or completely eliminated it, how would that make you better off?

What would you advise Japan to do?

https://www.statista.com/statistics/270121/national-debt-of-japan/

Ger Roe

https://www.boards.ie/discussion/comment/118426250#Comment_118426250

I am sure they are working on how to do just that ... 😜

It won't make me better off as I'm not in Ireland.

When(not if) the Multinationals start paying taxes in the Countries where they sell their products and generate their profits then Ireland will be unable to meet it's obligations and will start raiding private pensions again, introducing levies where previously there weren't levies and increase VAT and Income Tax still further while stripping away social services.

When(not if) Interest rates increase the debt pile will be unsustainable and Ireland will default with no further access to Credit.

cnocbui

https://www.boards.ie/discussion/comment/118426060#Comment_118426060

Our debt works out at €150,000 per income tax payer. The Fed just put a large torpedo through your low interest rate fantasy.

Debt should be avoided, not lauded and acquired with glee. NZ is also an island with around 5m people. They don't have the luxury of Ireland's multinationals, and yet pre covid, they had a history of balancing budgets and even had surpluses on occcasion - and they don't have CGT, DIRT, death duties, their VAT equivalent is 15% and highest income tax rate is 33%

dxhound2005

https://www.boards.ie/discussion/comment/118426309#Comment_118426309

Does your country have better social services than Ireland?

Immeasurably better.

dxhound2005

Not a good word to apply to taxation and welfare.

Ubbquittious

https://www.boards.ie/discussion/comment/118425989#Comment_118425989

Fecking hell lad you're in like a whippet

Geuze

https://www.boards.ie/discussion/comment/118426250#Comment_118426250

There is no space for any tax cuts, as our deficit still exists, our public debt is high, plus age-related costs will rise a lot.

Geuze

https://www.boards.ie/discussion/comment/118426309#Comment_118426309

Your concerns about CT revenues are reasonable.

However, given that most public debt is locked in at low fixed rates, the existing debt won't get dearer to service.

https://www.boards.ie/discussion/comment/118428306#Comment_118428306

As happened before the troika entered they will roll over bonds at increasing rates until the debt becomes unsustainable and with each bond issue the interest rate will need to go higher in order to get the bond issue "away" successfully and that is what will happen without any predators lurking around manipulating the market sentiment.

Next time it will be a bail-in, not a bail out too with the ECB telling them to take Citizens deposits before the Government approach the E.U. or IMF with the hand out.