The Department of Finance’s December Fiscal Monitor published yesterday shows that Exchequer expenditure outpaced its profile as did revenue but by a wider margin subsequently resulting in a small General Government Surplus in 2018.
Total revenue for 2018 amounted to €69.7bn, 3.3% ahead of profile while expenditure for the year was €71.8bn.
Corporate tax receipts provided a significant windfall to overall revenue. Over the course of the year corporate tax revenue amounted to €10.4bn, €1.9bn ahead of what was forecast for 2018 at the start of the year, however, roughly one third of the over-performance is expected to be non-recurring.
Corporate tax receipts accounted for 19% of total tax revenue in 2018, up from 16% in 2017. Goodbody Stockbrokers has today warned that Ireland’s dependence on multinationals to prop up Government finances and the wider economy could be its downfall given the volatile nature of corporate tax revenue and changing international tax environments.
Ireland’s corporate tax revenue is very much concentrated amongst a small number of firms, with just ten firms contributing to 40% of the total corporate tax take.
According to Goodbody Stockbrokers, "In the wake of the Global Financial Crisis, capital spending (voted) was cut by 62% between 2008 and 2013, however, current spending is difficult to reduce in the event of a downturn in tax revenues and remained broadly stable over this same period. Meeting higher corporate tax receipts with increased current spending is treading on thin ice if the former were to fall. A more prudent approach in 2019 would be allocating a revenue windfall on paying off Ireland’s large national debt or towards capital spending."