Ireland’s corporation tax cushions against hard Brexit
Receipts $300 million higher than previous estimates
Ireland’s corporation tax receipts for 2019 will be about €300 million
($330 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 this year, rising to €10.44 billion next year. The government had estimated receipts of €9.98 billion for 2019, and €10.465 billion for 2020. Ireland is heavily dependent on corporation taxes, which have more than doubled since 2012 and now account for about 17.5 percent of total tax revenues.
The value of the budgetary package to be announced on Oct.8 will be about €2.8 billion — €2.1 billion of which has already been pledged to areas including planned infrastructure spending and public sector pay.
Ireland will base its budget for 2020 on the assumption that Britain exits the 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
ECONOMY
two budget strategies for 2020 in June, a preferred option that would have seen its budget surplus grow if its neighbor leaves the EU in an orderly way, and a no-deal scenario forecasting a deficit to absorb the shock of such an outcome. Donohoe said the Irish economy had performed well in 2019, leaving the government with a budget surplus of more than €600 million or about 0.25 percent of national income, although there had been €450 million in overspending by some government departments, including health.
The minister said the government will go ahead with plans to move €1.5 billion from the Ireland Strategic Investment Fund into a Rainy Day Fund this year — but with the risk of hard Brexit looming, a €500 million 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 percent with an orderly withdrawal.