Rising corporate taxes an ‘incredible vulnerability’ to Irish economy – official

The national flag of the Republic of Ireland flies in the Bogside area of ​​Londonderry in Northern Ireland, September 25, 2015. REUTERS/Cathal McNaughton

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DUBLIN, July 4 (Reuters) – Ireland’s reliance on just 10 multinational companies to pay more than half of rising corporate tax revenues represents an “incredible level of vulnerability” to the economy, the ministry’s chief economist warned. Finance Monday.

Business income, mainly generated by large multinationals attracted to Ireland due to the low corporate tax rate, has risen sharply in recent years and accounted for almost a quarter of all tax revenues in the first half of 2022, after a 53% year-on-year increase. read more

The Treasury Department said this meant that 1 in every 8 euros collected by the state comes from “an exceptionally small number of companies” and that a shock affecting the multinational sector would have serious tax consequences for Ireland .

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“That’s an incredible degree of vulnerability,” Treasury Department chief economist John McCarthy told reporters. He said the level of concentration in such a small number of companies is something he has never seen in any other economy.

“This is something we are very concerned about.”

The level of concentration is even greater, including income taxes paid by multinationals such as Facebook, Google and Pfizer, which employ about one in nine Irish workers in often high-paying jobs, McCarthy added.

McCarthy said he was more concerned about the over-reliance on these types of companies than about the impact a global overhaul of corporate tax systems could have on Ireland’s position as a hub for multinational investment. read more

He also said the Treasury was likely to take $18 to $19 billion in corporate taxes this year, up from $16.9 billion forecast just three months ago and nearly fivefold over the past decade.

Treasury Secretary Paschal Donohoe said he shares the concerns McCarthy has long outlined, saying the best way to manage risk was to return to the pre-pandemic position of not using corporate tax receipts to fund permanent. to finance expenses.

His department forecast Monday that the Treasury was likely to post a modest surplus this year, but that it was solely due to exceptionally high corporate tax receipts and that if receipts had remained at pre-pandemic levels, a deficit of 1. 5% of GDP would have been created. ahead for this year.

Ireland on Monday increased its planned 2023 budget package amid its expected return to surplus. read more

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Reporting by Padraic Halpin; Editing by David Gregorio

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