Saturday 16 February 2019

Leprechaun economics pushes Ireland's EU bill up to €2bn

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Donal O'Donovan and Colm Kelpie

Ireland's annual price for European Union membership shot up to €2bn last year, a 20pc hike thanks to the so-called Leprechaun Economics phenomenon.

The contribution in 2017 is expected to reach €2.4bn. As recently as 2012 Ireland paid in less than €1bn for membership, and gained back more than that in farm supports and other forms of aid.

Since 2014 Ireland has been a net contributor to the EU budget, meaning membership comes at a financial cost. The Comptroller and Auditor General's annual report confirms a rise of around €300m in the cost of membership was paid in 2016, based on a standard measure of gross national income.

The report also shows the fall in our official debt is largely a result of the spike in growth, also linked to Leprechaun Economics, a term used to describe the apparent 26pc increase in the size of the Irish economy announced last year by the CSO. The "growth" was widely mocked and is linked to restricting by multinationals rather than real wealth increase.

The C&AG also examined Ireland's corporate tax receipts and found that the top 100 companies, ranked by taxable income, had a lower average effective corporation tax rate at 9.3pc than the rate applying to all companies of 9.8pc.

"This masks significant variations within the top 100 companies. While 79 of the top 100 had an effective corporation tax rate of between 10pc and 15pc, 13 had an effective rate of less than 1pc," the report said. Some 79 companies had effective tax rates of 10pc or more, and almost two-thirds had effective tax rates of 12pc or more.

Elsewhere in the report, the C&AG said the real cost of saving the banks stood at €40bn at the end of last year. The net cost was €56.4bn, but once the value of the State's stake in the banks is taken into account, along with Nama's projected surplus, it falls to just under €40bn.

The report also states that at the end of 2016, the value of the State's share in AIB was €11.6bn. "Subsequently, 29pc of the State's shareholding was sold at a price of €4.40 per share - around 5pc higher - in an initial public offering of AIB to institutional and retail investors," the report noted.

Because the investments in the banks were funded by increased borrowing, the C&AG said the State bears additional annual debt service and other related costs. In total, the debt-related cost to the State associated with the investments was around €14.8bn between 2009 and 2016.

Irish Independent

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