The change in corporation tax receipts seen over the last three months is “a sobering reminder” of why the Government should be running budget surpluses, Minister for Public Expenditure Paschal Donohoe has said.
Speaking on Tuesday on a visit to the United States, he said Ireland could absorb the fall-off in revenue generated from corporation tax into its budget surplus.
“If Ireland was still borrowing, we would be in a very different situation.
“We can absorb the decline of corporate tax receipts over the last number of months because we have a surplus. And it is the reason why we have needed to balance our books and run surpluses twice now,” Mr Donohoe said.
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“I have always said we would get to a point where corporate tax receipts will begin to go down. We saw three months in which that [happened]. And we are now able to manage that kind of decline because we have a surplus.”
The Minister said November was an important month for the Government in terms of collecting tax revenue. However, he said the Government Ministers normally found out about the details only on the last day of the month and the first day of the following month.
Mr Donohoe will be meeting political and business leaders in New York and Washington this week in his capacity as president of the Eurogroup and Minister for Public Expenditure in Ireland.
“We’re seeing our economic outlook for next year is different to how it has been in recent years for both Ireland and Europe. And I will be making the case to the investors that that is an economic performance that is still strong in the context of the economic shocks that Europe and Ireland has faced,” he said.
Asked whether a continued fall-off in corporate tax revenue would impact on the Government’s strategy for dealing with pay for nearly 400,000 staff on the State’s payroll, Mr Donohoe said: “It won’t, as for 2024 as we already had provisioned in the expectation of getting a wage agreement for public servants next year.”
Talks on a new public-service pay deal commenced in recent days and the Minister said he hoped any agreement would be “affordable and still insulate us from any further decline in corporate taxes”.
He said his ambition was to try to secure “a more comprehensive agreement” with the public-service trade unions.
He said a key feature of such accords was not just a deal on the level of pay rises staff in the public service would receive, but also that they provided for industrial relations peace and stability.
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