Ireland's reliance on Corporation Tax receipts

Kermit.de.frog

Exchequer faces €31bn deficit by 2030 if corporate taxes fall

Modelling by the Department of Finance highlights the ‘magnitude of the vulnerability’ of the state’s reliance on windfall corporate taxes

https://www.businesspost.ie/news/exchequer-faces-e31bn-deficit-by-2030-if-corporate-taxes-fall/

No exaggeration to say this could be a disaster in the making and I think every right thinking person should be very angry at the giveaway budget. This is 2008 all over again.

The opposition parties wanted to spend more.

Obviously lessons from the trauma of 2008 - 2010 have not been learned.

Then it was unsustainable housing market income that ultimately led to the IMF bailout. Same thing is going to happen again.

jackboy

https://www.boards.ie/discussion/2058376750/irelands-dangerous-reliance-on-corporation-tax-receipts

Yes, and when it does our politicians will just blame Trump or some other future US politician. They will say we could not foresee this happening. It will happen.

What will make it far worse is the current intentional destruction of the farming and tourism industries. It will bottom out in a worse place than the last crash.

NSAman

I agree. Ireland is facing a complete and utter financial disaster in the coming years. There is total over reliance on foreign entities. The levelling of the tax laws internationally (with other countries becoming more attractive) will end the “Ireland is an at an advantage as we are in Europe and English speaking”.

Let’s be honest here, we are not dealing with rational people when we talk about politicians. ‘Live now, pay later” is always going to be their way of buying votes. No plans for the future. If we as people lived our lives like this we would be in financial ruin …. Ohh wait… 2008!

Damien360

We have learned nothing. I have been saying to friends for years that this has all the hallmarks of 2008 again. Left leaning government, giveaway budgets, insane housing prices, unsustainable housing investments, really poor building quality (the next big fix), massive corporate receipts. And to top it off, we are filling the country with extra welfare recepients daily. Inflation is locally out of control especially on food, and energy while Europe is cutting interest rates which just stokes the fire for us. We are in trouble and the world is overdue a recession. Big industry is cutting back globally (pharma and intel for us - job cuts incoming).

Madeoface

There's no doubt the CT take has increased to a worrying extent. Dept. Finance are like met eireann now though, so many red warnings that peter out. We're still in surplus.

What has to happen now, in surplus times, is to stop Xmas 'bonuses' for the welfare classes, stop any welfare increase above inflation, stop pointless expenditure schemes and reduce the number of NGO's.

On the tax side, keep inheritance tax as it is. We''ll be looking at USC rates go back up when CT starts falling and the Vat net widening.

Except for the giveaways to the non working I thought the budget was good. I'd have extended vat cut in hospitality though in lieu of the child benefit double double (I have kids, don't need it twice). Government needs to increase capital spending and take a long hard look at current spending, like administration staff levels in the HSE, disability benefits, rte, payments to Peter mcverry trust and their ilk....

Grassy Knoll

Someone talking sense - I fully agree, this is an issue that does not get the attention it deserves. While there has been moves to put some money in a sovereign wealth fund, the government is still spending a large amount of the windfall CT monies on buying the election. I understand we are actually running a deficit if the transitory corporation tax are discounted. Effectively we are building a lifestyle on ‘overtime’ earnings with a high risk that this will income not be continued in the medium term.

Some will rightly point to infrastructural deficits, housing etc, but the reality is with an economy at full employment the people to do this work are not there.all will happen is the prices will go up. Better the money be saved and invested when capacity is there to spend it. Essentially this might mean in years ahead we have the money to invest in bad times, retaining employment, lessening the possibility of cutbacks, emigration, unemployment etc. and it it isn’t as if the government are not spending billions on these areas currently.

we never learn the lessons in this country, the easy political option always, no long term planning. We will in all likelihood look back at these years as when the rot began to set in again. There are warnings from within the civil service and fiscal council, but these are going unheeded.

NIMAN

I would love to see the Government put away more of our CT receipts into rainy day funds, because one thing is certain, rainy days will come again.

We are really flush with money at present and it looks like it'll continue for a few years yet, but it doesn't mean you have to go mad with it and give it all away willy nilly. Be smart and realise that it might not always be here. Save most of it while it's coming it.

But no, there was an election to be bought, so let's have another giveaway budget. Politics in this country is so short term. About the here and now and the next couple of years at maximum. A bit of the old 'ah sure it'll be grand' logic.

Stop being so generous to those who don't want to work in a time of full employment. How we have adults who have never worked in their lives is beyond me. Then again, it should not be a case of it being a lifestyle choice. You should ALWAYS be better off working. Benefits should be reduced over time, not increased. 'Ah sure Xmas is coming, here have a double bonus'. Crazy logic.

Kermit.de.frog

What I can't understand is you would think 2008 would be burnt in to the Irish psyche with all those lives destroyed, all those young people who had to leave a broken country.

Yet here we are again. Exact same sh!t. Expanding spending on taxes that most likely will not last.

We know where this ends. At least most of us do.

tom1ie

Do we know how many workers we have directly employed in FDI?
Let’s take the top 5 multinationals that are here and get a figure on employees- how many would that be?

ancapailldorcha

Ireland is a rich country and I'm not sure it feels like one, outside of property prices and a few specific areas.

I think relying on corporation tax is a dangerous strategy as resentment against corporations' tax evasion grows. I think there needs to be some sort of coordinated international attempt to make sure these companies pay their taxes. It would go a long way towards improving the housing and infrastructure situations if nothing else.

greenfield21

The thing I don't understand about all this over the years is how the current government don't get enough criticism for how badly they have managed all of this. They have zero impact on MNCs and tax receipts, this gold mine all came about in late 80s and 90s when policy was changed. Obviously they won't change it but more needs to be written about how this government has achieved nothing and just ridden on the coattails of the profits of a few MNCs. While they claim about how great they have managed the economy, yet the opposite is true in how they managed government finances. Essentially all they've done over the last no of years is use this money to buy votes.they really can't stop spending, it's crazy.

enricoh

Cormac lucey in the Sunday times last week said we as reliant on multinationals to pay the bills as we were reliant on the potato to survive pre famine.

Think Joe soaps aren't overextending, neither are banks. Government spending is completely out of control. They announced a further billion in welfare and housing last week, 2 weeks since the budget- all optics not putting it in budget, try n not look as bad.

They can't pee it away quick enough!

tom1ie

This money really needs to be put into infrastructure and increasing the capacity to build infrastructure.
We’ve a massive demand for housing, but we don’t have enough skilled workers to deliver it, we should be increasing this capacity.

We need more housing, transport and energy upgrades/new builds, but everything gets stuck in ABP. We need to upgrade this department massively and get building when we have the workers available for key projects.

Madeoface

https://www.boards.ie/discussion/comment/122739475#Comment_122739475

Total FDI employees were 301,475 in 2022. Oireachtas figure may 2023.

Kermit.de.frog

https://www.boards.ie/discussion/comment/122739488#Comment_122739488

They are paying their taxes, more and more - in Ireland. That's the problem for this country.

It doesn't have to be a problem so long as it is not used to fund public spending.

jackboy

https://www.boards.ie/discussion/comment/122739491#Comment_122739491

When the next crash happens and the IMF are back, they will tax and cut where ever necessary. The last time they focused on workers, many from Multinationals. If they are depleted, tourism and farming already intentionally destroyed, then that leads to benefits being reduced on mass. That will be a very different sort of recession.

Madeoface

Ah sure the Fiscal Council were at it too. Doubled the money to their Chair a year or two ago.

Do as I say, not as I do.

JVince

This is almost like a repeat of the bs scare stories the business post has published in 2015, 16,17,18,19,20,21,22,23.

They will do the same in 2025,26,27,28,29,30 etc etc.

Whilst a world recession would affect Ireland badly, the normal to's and fro's of business will not

Yes, we have to manage and watch things, but a lot of that tax is from Irish based operations of these companies.

It's a while since I bought the business post as they have gone down the daily mail route if hysterics. The Currency is way above the bp in terms of journalism.

drunkmonkey

We're paying too much in tax, I see this morning we might be joining the European Iron Dome that won't be cheap and makes us a legitimate target.

Billions are going to NGO's and Millions more fighting them in the courts.

We're not going to be able to afford welfare if the economy does take a tumble, what happened in Denmark will unfold here but we're just a few years behind.

Europe wants the big multinationals in the likes of Germany and France, America wants them home. The right incentives and they'll leave here.

We're back to the half a million 3 Bed semi, this isn't sustainable. The war in Ukraine should be over before Christmas so hopefully that'll take pressure off housing. That could create some discontent as we'll end with people looking for negative equity bailouts.

I think in the round we'll be ok, the country needs serious infrastructure development especially with transport, road, rail etc. Travel times are ridiculous for a small island. That money should be spent now not when things take a wobble.

howiya

The COVID pandemic hasn't helped. Yes it was right at the time that government help people but it has created an expectation that the government have to or should pay for everything. Current government expenditure has ballooned since.

We need a fiscally prudent party to tackle waste and expenditure obut there's no votes in that.

Jinglejangle69

60% of households in this county are negative beneficiaries to the state.

Just think of that, only 4/10 households benefit the state positively financially.

Yes we are on course for another recession which will be worst seems we’ve added another 500,000 people since the last one.

tom1ie

https://www.boards.ie/discussion/comment/122739636#Comment_122739636

Where are ya getting those stats from?
That’s insane!

Jinglejangle69

https://www.boards.ie/discussion/comment/122739713#Comment_122739713

8/10 in Northern Ireland.

blackwhite

https://www.boards.ie/discussion/comment/122739473#Comment_122739473

2008 is burnt into the minds of Irish voters - but they’ve been peddled rubbish that it was all the fault of the banks, the bondholders and greedy developers.
The irresponsible economics pushed by each and every political party from 2002-2008 (and endorsed by the electorate) are given free pass

Jinglejangle69

Here.

Pauliedragon

I'm not disputing those figures but I'd like to see stats on how many of those households in the 60% are OAP households.

creeper1

The contrast between the UK and Ireland could not be more stark. Ireland is expected to have a budget surplus of 10 billion euros this year (edit it's actually it is more like 25 billion when taking apple's one off payment into account) and next year is projected to balloon to a truly mind boggling 20.8 billion euros. An unimaginable amount of money!

The UK is actually in a budget deficit. They have a black hole and need to go cutting ✂️ winter payments to pensioners.

Long may this continue (and by all accounts it will with 2026 and 2027 all being projected to bring in ever increasing amounts of money 🤑).

It does lead to wasteful spending however and we see wasteful examples of money thrown away on bike sheds and dail offices. The ballooning cost of the children's hospital and ridiculously expensive modular homes for Ukrainians.

When there is so much money around there is no need for any real fiscal discipline and public private partnerships have the private milking a lot of the money from the state.

tom1ie

https://www.boards.ie/discussion/comment/122739781#Comment_122739781

Are those figures based on working age range?
ie excluding beneficiaries of the state pension?

Grassy Knoll

https://www.boards.ie/discussion/comment/122739467#Comment_122739467

the issue is we are nearly all welfare recipients in this country: children's allowance, energy credits, free school books, free dinners, all sorts of grants to unviable SMEs, agriculture, double double allowances … etc etc … the gravy being doled out is across society, we are nearly all in it … what went on in the recent budget is repeating the mistakes of the past … remember this is a right of centre government, imagine it was a bunch of left wingers ….

Geuze

Yes, it is a worry.

Credit to Seamus Coffey, UCC.

Geuze

Here is some analysis of the concentration risk:

2023_IFAC_Understanding-Irelands-Top-Corporation-Taxpayers.pdf

Geuze

Revenue data on CT payments:

2024_Revenue_CT-analysis_2023payments_2022returns.pdf

CarProblem

https://www.boards.ie/discussion/comment/122740236#Comment_122740236

"When there is so much money around there is no need for any real fiscal discipline"

Em what? How did that work out in the early 2000s? The government is committing to recurring current expenditure measures that the country will not be able to afford if the Corporation Tax golden goose gets ill. It is utter stupidity but the Irish electorate continuously fails the grown ups version of the marshmallow test so what can you do? We have people in this country who've lived through 2 national bankruptcies caused by FF who will still vote for FF 🤷‍♂️

I've simply come to the conclusion that one must accept the country going bust every 25-30 years or leave, as we simply do not have a mature population that can see past the end of their own noses and not behave like Veruca Salt

kneemos

2008 was a blip in fairness as recessions go. Most of Europe is already in serious budget deficit and .asking painful cuts all over.

We're not the only country offering incentives to these giant corporations but they choose to come and stay. Wouldn't be overly concerned about some hypothetical.

Quitelife

our public sector is the best paid and most inefficient in Europe with no accountability for anyone and the amount of managers to staff is insane … everyone in the public sector thinks they should be on 100k when they’d be sacked in the private sector for incompetence …..as a career guidance teacher one said if your lazy and want a good pension join the public service ..

CliffHangeroner

https://www.boards.ie/discussion/2058376750/irelands-reliance-on-corporation-tax-receipts

The fact we've learnt the square root of zero since the 2008 crash leads me to believe whatever is coming down the track is completely deserved.

The same people on every other current affairs radio or TV show asking for more more more are the same one's who'll vote for FG and FF again and again and then be ringing in the Joe Duffy show in a few years time crying about how unfair it all is that they are broke and struggling.

CliffHangeroner

https://www.boards.ie/discussion/comment/122739636#Comment_122739636

And a lot of them expecting the state (the taxpayer) to give them a council house, dole and medical card.

techman1

the issue is we are nearly all welfare recipients in this country: children's allowance, energy credits, free school books, free dinners, all sorts of grants to unviable SMEs, agriculture, double double allowances … etc etc … the gravy being doled out is across society, we are nearly all in it … what went on in the recent budget is repeating the mistakes of the past … remember this is a right of centre government, imagine it was a bunch of left wingers ….

You are wrong there it's definitely not a right of centre government, all governments in Ireland have been essentially leftist and socialist even more so in the last decade. Probably the only time we possibly had a centrist government was during the celtic tiger ,at least then the tax burden on workers was reduced making it more worthwhile to work which explains why we were able to build all those houses back then ( yes we built too many ) now the government reluctantly gives tax cuts but all the spending is on welfare payments, that is a socialist not right wing policy. Therefore people are not prepared to work on building sites etc like 20 years ago as the government is creaming off too much tax from middle income workers and making work less attractive

crusd

https://www.boards.ie/discussion/comment/122739467#Comment_122739467

Investment in the productive capacity of the economy through massive infrastructure and housing projects, as well as creating an indigenous startup culture is what is needed. Creating a rainy day fund is about the worst thing we could do with our money as essentially it would just be funding other countries / corporations growth through however its invested and not actually doing anything to create local organic growth.

Are the rainy day brigade the ones who would stick the 10k win on the local GAA lotto in the credit union rather that repairing the leaky roof in the house?

engineerws

I just find it mad that the the nationdebt is €234 billion now

https://www.financedublin.com/debtclock/

In 2008 it was about €40 billion.

Whenever I raise this online people reply that it doesn't matter it's only national debt but if there was ever a systemic shock, who would be willing to loan us another €200 billion?

crusd

https://www.boards.ie/discussion/comment/122744689#Comment_122744689

Mistake everyone makes is thinking the national debt is the same as a mortgage. But even so at 57% of GNP it would be a very manageable mortgage.

The difference being of course that an economy will remain a productive asset. A 20% fall in GNP would be a disaster but the debt to GNP ration would still be good

facehugger99

A lot of politicians being blamed and in fairness they are a bunch of self centred cowards.

But, any political party preaching prudence and long term planning would be decimated in an election here.

It’s the electorate that are the real problem in this country.

The politicians are simply a reflection of our own shortcomings.

We haven’t learned a thing from the last recession and we deserve everything that’s coming down the tracks.

blackwhite

https://www.boards.ie/discussion/comment/122745786#Comment_122745786

Michael Noonan tried it in 2002 and got his arse handed to him.

Every political party leader since then has realised that promising the sun, moon and stars is the way to an Irish voter's heart.

Wanderer78

https://www.boards.ie/discussion/2058376750/irelands-reliance-on-corporation-tax-receipts

…this is not exactly like the lead up to the 08 crash, but it is similar in ways, again, the main reason for that crash was our over reliance on credit which of course fueled a property boom, yes we re still doing this today, but we re some what protected by the fact, a significant proportion of this debt has now been institutionalised by major investors, which of course is still helping to cause a property boom, along with our serious supply problems of course. if any of these investors were to go bust, theyd very likely be bailed out, so nothing to really worrying about there….

yes we re exposed by being heavily dependent on corporate taxes, but its less likely that ll dry up anytime soon, this was always our long term plan anyway, when we opened up to such investment, so, its working….

…so thank god for the surplus, and plough on with the spending, but spend it wisely, just bloody stop giving property buyers more money to speculate in property markets(first time buyers), and use it to bloody build them!

…get cracking with investing in our long term infrastructure needs!

Grassy Knoll

https://www.boards.ie/discussion/comment/122745839#Comment_122745839

Our approach to FDI was always about the jobs, the CT has come about from international tax reform, of which we were an unexpected beneficiary - it has largely taken us by surprise. To spend it now would be foolish IMHO - there is not the capacity to deliver housing, infrastructure etc at scale. To spend further money now would only serve to increase the wages of builders etc - not a bad outcome if you work in that sector, or that is your policy objective

Emblematic

The policy of attracting and retaining foreign multinationals, though it yields a lot of tax, is damaging to our society in a similar way that an abundance of oil (or some other resource) is damaging to many third-world societies. It creates a top-heavy economy which stifles local creativity and enterprise. In addition it makes rents unaffordable for local people.

kippy

https://www.boards.ie/discussion/comment/122746367#Comment_122746367

People have short memories or perhaps are too young to remember...…

While it's best to have a mix/broad base when it comes to taxation etc you'd need to take a long hard look at shooing away the FDI investment in this country. I remember a time when people HAD to immigrate for work, where people routinely left school early, where real poverty existed and in general where we had a much poorer society. Some of the bounce is the EU, some is FDI and all it has brang with it.

We are by no means perfect but jesus some of the opinions on this thread show a short memory.

Now we do have an issue with spending v income and the lop sided tax take.

Emblematic

https://www.boards.ie/discussion/comment/122746423#Comment_122746423

It is certainly true that at one point we needed FDI and the more the better at that point in time. But just because it was the correct policy at one point in our history does not mean that it is always the correct policy. This is where I think we are going wrong in the country. We persist with policies that once made sense even after they have stopped making sense are are now damaging.

I'm not saying drive out all foreign multinationals by the way. But more multinationals on top of what we have is not the correct way forward.

buried

Guaranteed wallop incoming. But too late yet again. 4 years ago if you mentioned any of this up in here you were harangued "da conspiracy tred is data way"

kippy

https://www.boards.ie/discussion/comment/122746436#Comment_122746436

You can't blame the state for continuing to chase FDI or building on what is there. You can however blame the state for housing policy and everything that goes on around it or the lack of investment and/or poor investment decisions that have happened over the last number of decades.

Emblematic

https://www.boards.ie/discussion/comment/122746663#Comment_122746663

You can of course blame the government if they are pursuing a policy that is no longer working for the good of the country which, in my opinion, is the situation.

Of course, housing policy and other policies can also be criticised (as they should). But just because a policy was needed at one point in our history does not automatically mean that it will be the correct policy forever.