Dáil Éireann Debate, Tuesday - 24 February 2026
394. Deputy Malcolm Byrne asked the Tánaiste and Minister for Finance if modelling has been carried out by his Department on the impact on tax revenues if significant contributors of corporation tax were no longer making such payments; and if he will make a statement on the matter. [15120/26]
Amharc ar fhreagraMy Department has published a significant volume of work in recent years analysing the risks to fiscal sustainability, with corporation tax a key focus. Due to the Revenue Commissioners’ obligation to maintain taxpayer confidentiality, my Department does not have access to the details of specific taxpayers and, as such, scenario analysis in respect of corporation tax is necessarily 'top-down' in nature.
As part of Ireland's Medium-Term Fiscal & Structural Plan, published in December, my Department published two indicative scenarios to illustrate 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. if 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 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, these are simplified, indicative scenarios. In reality, a shock to the FDI sector could have even greater implications for the public finances: large multinational firms also contribute a significant proportion of income tax and VAT receipts, so there would likely be considerable 'spill-over' effects.
This Government is actively working to mitigate our exposure to corporation tax. By the end of this year, there will be some €24 billion invested in the Future Ireland Fund and Infrastructure, Climate and Nature Fund. This means we are setting aside a portion of 'windfall' tax receipts to prepare for the future and enhance our economic resilience, instead of relying on them to fund day-to-day spending.
More broadly, as set out in the medium-term plan, we will continue to run headline surpluses and pursue a balanced and appropriate approach to overall budgetary policy. This is the best way to guard against a downturn in corporate tax revenues.
