Corporation tax receipts were €1.4 billion ahead of expectations, totalling €10.9 billion in 2019 helping the overall tax take rise by almost 7 per cent.
The Department of Finance said on Friday morning that taxation receipts last year were €1.4 billion ahead of original expectations on the back of the strong corporation tax performance with the take totalling €59.3 billion.
The over performance will result in a surplus of 0.4 per cent of GDP, or about €1.5 billion for last year, up from the expected 0.2 per cent set out in October. The Government is aiming to achieve a surplus of 1 per cent of GDP by 2022, equal to as much as €3.6 billion a year.
“Running budgetary surpluses is the first line of defence when it comes to our over-reliance on corporation taxation receipts. Our aim is to build on this, achieving a surplus of 1 per cent of GDP by 2022 and maintain that over the medium-term – subject to continued economic growth,” said Minister for Finance Paschal Donohoe.
“In other words, ‘excess’ corporation tax receipts are not being used to finance day-to-day spending but to reduce debt,” he added.
His comments follow repeated warnings against using increased corporation tax receipts to fund day-to-day spending. The Irish Fiscal Advisory Council (IFAC) suggested that between €2 billion and €6 billion of these receipts could be classified as “excess”, or beyond what would be expected by the economy based on historical and international norms.
Voted spending
During the year, gross voted spending on public services and infrastructure totalled €67.4 billion. Current spending accounted for €60 billion of that while capital spending rose 22.5 per cent to account for €7.4 billion.
The release of the exchequer returns come after noting the corporation tax surge come after Google parent Alphabet said it will no longer use the intellectual property licensing practice known as the “double Irish Dutch sandwich”. The tax loophole allows companies incorporate in the Republic while being tax resident elsewhere. In effect, this allowed those companies channel billions of euros of profits through the Republic and on to Irish-incorporated entities elsewhere.Learn more
Mr Donohoe told RTÉ earlier on Friday that the impact of shutting the loophole in the middle of the last decade has already fed through into our tax affairs.
“But I believe that the increases we have seen we cannot rely on them in the future and that is why, firstly, growing the surplus that we’re announcing today is an imperative and secondly, also growing the number of people that work in the different kinds of jobs that they have will become even more important, and we have more people at work in different kinds of work and that’s also a really important insurance policy to that kind of risk,” he said.
