Gains from corporate tax receipts should be ring-fenced for much-needed capital investment, rather than built into the base of current spending, the country’s biggest business body has argued.
Ibec, in its submission to a Government review of the corporate tax code, claimed that building gains into current Government spending will leave the State vulnerable to fluctuations in the tax base in the future.
The amount of corporation tax collected from businesses jumped 60pc between 2014 and 2016. In 2014, the corporation tax yield was €4.6bn, representing the fifth-largest contributor to the Exchequer, and rose by 49pc to €6.87bn in 2015. Last year the take increased to €7.35bn. That was about 11pc, or €737m, better than expected.
Some €7.7bn is forecasted to be collected in 2017.
About 80pc of corporation tax paid in Ireland is from foreign multinationals, leaving the State exposed to shocks, the Department of Finance has warned.
“At a time when you have increased volatility worldwide – we’ve just gone through the biggest change in corporate tax globally in 100 years, you’re seeing threats from the US in terms of the border adjustment tax, and the EU in terms of the Common Consolidated Corporate Tax Base (CCCTB) – we’re saying that any excess boost should be put into capital projects, particularly like higher education and road investment,” Ibec senior economist Ger Brady said.
Ibec said that, on average, this would have meant ring-fencing around 9pc of corporate tax receipts since 1995.
Corporation tax performance so far this year has been weaker than expected, but Mr Brady said it is too early to place any stock on the figures yet.
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