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Government plans to spend almost 90% of corporate tax windfall, says Ifac
DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.
The Government is planning to spend almost 90 per cent of the corporation tax revenue it generates over the next five years, a conference heard yesterday.
Irish Fiscal Advisory Council (Ifac) economist Brian Cronin said the Coalition’s recently published spending plans indicate it will save just €1 out of every €8 (12.5 per cent) generated by the business tax between 2026 and 2030.
“We think the Government should be running bigger surpluses and setting aside more money,” Cronin said at an Ifac-hosted conference on the future of the State’s public finances.
“The economy continues to perform well and does not need any additional fiscal stimulus, and we know we are facing future (financial) challenges from ageing and climate change,” he said.
A report published by Ifac on Thursday indicated that just three companies were responsible for almost half of Ireland’s corporate tax haul in 2024
The companies, understood to be Apple, Microsoft and Eli Lilly, were responsible for 46 per cent or €13 billion of the €28.1 billion collected that year.
The report highlighted the State’s dangerous over-reliance on this highly concentrated revenue stream.
“It’s not that they [corporate tax receipts] are going to fall off a cliff tomorrow, it’s more so that they could be much higher or much lower than their current levels just because of that level of concentration,” Cronin said.
“You’re now at the whims of company decisions, new products not selling well … when it’s this concentrated, little things like than can make a big difference,” he said.
The State’s corporate tax base has risen by 700 per cent since 2014 – rising to a record €32.9 billion in 2025 – as the firms driving it became more profitable and as they on-shored more intellectual property (IP) assets here amid a clampdown on multinational tax avoidance.
Ifac chairman Seamus Coffey said corporate tax revenue could climb to above €40 billion a year by 2030.
“But (Government) surpluses are not projected to increase, so that means corporation tax is being baked into spending,” he said.
“And by the time you get to 2030 you’re looking at close to 90 per cent of it being spent,” Coffey said.
He noted the outlook for corporate tax remains very positive with a new 15 per cent minimum rate expected to add to up to €5 billion to State coffers.
Much of the revenue is also centred around three companies which reside in successful sectors and which are forecast to see their profits to grow, he said.
“On the pharmaceutical side, we’re seeing the active ingredients for some key drugs being manufactured here and if the output and demand for those continue to grow that would also drive corporation tax higher,” Coffey said.
The OECD’s Sean Dougherty addressed the conference on ageing and AI, suggesting advances in AI could reduce the cost of healthcare to the state in the future.
Ed Cornforth from the UK’s National Institute of Economic and. Social Research (NIESR) delivered the findings of research on which taxes were best and worst for growth.
On the surface, hikes in corporation tax were the most corrosive but there were caveats.
