Business Irish

Tuesday 23 January 2018

Department 'working blind' on corporation tax receipts

Finance's Derek Moran. Photo: Tom Burke.
Finance's Derek Moran. Photo: Tom Burke.

Shane Phelan and Colm Kelpie

The head of the Department of Finance has admitted it is "working blind" on projected corporation tax returns.

The admission by secretary general Derek Moran came a day after the Government announced the exchequer tax take so far this year was over €3bn more than expected.

The increased tax take was mainly due to stronger corporation tax and VAT payments. The corporation tax take was €2.3bn more than expected, accounting for €6.3bn of the €42bn in overall taxes taken in this year.

Mr Moran told the Dail Public Accounts Committee it was not yet possible to say for definite what factors had contributed to the increase in corporation tax.

"It is going to take us some time to drill down into this," he said.

"We do have to understand, but some of that will only come with the detailed tax returns."

Independent TD Shane Ross said it was "quite concerning" that official predictions could be so far off the mark.

Assistant secretary general John McCarthy said the weakening of the euro against the dollar was a likely factor.

Mr McCarthy said the corporation tax take was often susceptible to developments at particular companies. He said: "A significant part of the overshoot is down to a small number of firms."

However, Mr McCarthy could not specify which firms were involved. "We are prevented under the legislation, and rightly so, from having firm specific information," he said.

Separately yesterday, Fiscal Advisory Council chair John McHale told the Oireachtas Finance Committee that there was "limited understanding" of the reason behind the surge in corporation tax.

"Which means that we have to be very cautious in relying on the recent surge continuing in terms of funding permanent increases in spending," Mr McHale said.

He said it was "hard to believe" that the increase in the level of corporation tax receipts was down to companies making more profits.

He said very volatile factors that have been driving the increase, such as the strength of the dollar, could be reversed.

Irish Independent

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