You are here
Soaring Irish company taxes help guard against hard Brexit
IRELAND'S corporation tax receipts for 2019 will be around 300 million euros (S$454 million) higher than previous estimates, figures released on Saturday showed, giving the country a cushion against any economic slowdown in the event of a hard Brexit.
In a paper published ahead of next week's budget, the government said it expected corporation tax receipts of 10.28 billion euros this year, rising to 10.44 billion euros next year.
The government had estimated receipts of 9.98 billion euros for 2019, and 10.465 billion euros for 2020.
Ireland is heavily dependent on corporation taxes, which have more than doubled since 2012 and now account for around 17.5 per cent of total tax revenues.
The value of the budgetary package to be announced on Oct 8 will be around 2.8 billion euros - 2.1 billion of which has already been pre-committed to areas including planned infrastructure spending and public-sector pay.
Ireland will base its budget for 2020 on the assumption that Britain exits the European Union (EU) later this month without agreeing a separation deal, setting aside funds for vulnerable sectors, Finance Minister Paschal Donohoe said on Friday.
Ireland had presented two budget strategies for 2020 in June, a preferred option that would have seen its budget surplus grow if its neighbour leaves the EU in an orderly way, and a no-deal scenario forecasting a deficit to absorb the shock of such an outcome.
Mr Donohoe said the Irish economy had performed well in 2019, leaving the government with a budget surplus of more than 600 million euros or around 0.25 per cent of national income, although there had been 450 million euros in overspending by some government departments, including health.
The minister said the government will go ahead with plans to move 1.5 billion euros from the Ireland Strategic Investment Fund into a Rainy Day Fund this year - but with the risk of a hard Brexit looming, a 500 million euro top-up from the Exchequer next year will not happen, with the government setting aside any available funds to deal with the impact.
The Irish economy is forecast to flatline next year if Britain crashes out of the EU without a deal, rather than grow by 3.3 per cent with an orderly withdrawal. REUTERS