Dáil Éireann Debate, Tuesday - 21 April 2026
259. Deputy Sean Fleming asked the Tánaiste and Minister for Finance the steps that have been taken to diversify Ireland’s corporate tax base, and to move away from a cohort of less than ten multinationals; and if he will make a statement on the matter. [26615/26]
View answer295. Deputy Pádraig O'Sullivan asked the Tánaiste and Minister for Finance the assessment that has been made of the State’s increasing reliance on corporation tax receipts; the risks this poses to the sustainability of the public finances in the medium term; the steps being taken to mitigate those risks; and if he will make a statement on the matter. [26733/26]
View answerI propose to take Questions Nos. 259 and 295 together.
One feature of the Irish public finances over the past decade has been the increase in corporation tax receipts.
My Department published an analytical paper in December entitled “Fiscal Vulnerabilities – Expanding costs, narrowing base” showing that corporate tax receipts in Ireland are concentrated among a small group of firms in a limited number of sectors.
While increasing tax revenues are, of course, welcome, we must always be cognisant of any growing dependence on a single revenue stream.
Acknowledging this, as part of the Government’s Medium-Term Fiscal & Structural Plan (MTP), published in December, my Department published two indicative scenarios to highlight the risks of an overreliance on corporation tax. These scenarios demonstrated the impact, relative to baseline, on the general Government balance if:
1. receipts flat-lined at 2025 levels and;
2. receipts declined to 2020 levels by the end of the forecast horizon.
In the first, more benign scenario, the fiscal position would swiftly deteriorate, returning to a budget deficit by 2028. In the second, more severe scenario an immediate deficit would open up in the public finances, growing rapidly over the rest of the decade.
Of course, this analysis makes use of simplified, indicative scenarios. In reality, a shock to the multinational sector could have even wider implications for the public finances. As shown in the Department’s Fiscal Vulnerabilities paper, there are strong sectoral inter-linkages between corporation tax and income tax revenue streams. This suggests that income tax receipts could also be vulnerable to a potential shock that could also impact the State’s corporation tax receipts.
Acknowledging this, the Government’s fiscal strategy is centred around mitigating risks. Firstly, we are continuing to target budgetary surpluses over the coming years. Secondly, we are making transfers into the State’s savings vehicles. By the end of this year, we will have transferred around €23 billion into the Future Ireland Fund and the Infrastructure, Climate and Nature Fund.
Finally, we are continuing to invest in critical infrastructure. Such investment represents a form of saving, as it will boost the productive capacity of the country, strengthen our competitive position and help to generate future tax revenue via increased economy activity.
