€2.2bn rise in corporation tax take shows dominance of multinationals
A €2.2bn rise in corporation tax receipts last year bolstered the Exchequer and allowed the Government to meet overspending on health and balance the Budget.
The latest analysis from Revenue shows that an increase in company trading profits was likely to be behind the surge in payments.
Offsetting tax credits from research and development and losses incurred in the financial crisis had faded from the picture.
The downside was that the data illustrated how dependent the State is on US multinationals. They paid 77pc of all company taxes and their exports have powered the economic recovery from the crisis.
The numbers released by the Revenue Commissioners said that of the bumper €10.4bn collected from company taxes last year, a gain of €350m, was due to accounting changes and a further €350m in receipts were one-off.
"The remainder of the growth arises from improved trading conditions and increased product sales among large multinational companies based in Ireland," it said.
With receipts from foreign-owned companies, largely the US multinationals based here, that increase mirrors an increase in their underlying profitability.
Credit ratings agency Standard & Poor's has estimated that US company profits rose 20pc in 2018 from 2017.
The problem with corporation taxes is that they are very unpredictable and have become more volatile over time.
An additional risk for revenues is their concentration in a very small number of industries, such as medical and pharmaceuticals, which accounted for a third of the €140bn of goods exported last year.
Government forecasts for this year show a small decline in company tax receipts is expected at €9.98bn before they start to rise again.
By 2023, the State expects to be collecting €70bn in tax revenues, of which €11.7bn is expected to come from company taxes.
Ireland is not alone in seeing a surge in corporate tax receipts since the end of the recession - they have risen sharply across the European Union since hitting a low in 2009.
Corporation tax here accounted for almost 19pc of State tax revenues in 2018 compared with an average of 13.3pc in 88 countries surveyed by the Organisation for Economic Co-operation and Development.
Those relatively high revenues from just one source finance a tax regime that has one of the lowest rates of personal taxes in the OECD, especially for a married couple with children.
This is done on a tax take overall of just 25.7pc of gross domestic product, well below the eurozone average 46.8pc.
Last year likely saw the final flush of the export-led growth of recent years that saw the economy expand by 6.7pc.
Going forward, expansion rates will come in below 4pc, according to forecasts from the Department of Finance, and will become more dependent on domestic growth.