Irish Revenues Outstrip Targets In 2015
Ireland collected EUR3.3bn (USD3.6bn) more in tax revenue in 2015 than forecast, helping to reduce the fiscal deficit by EUR5.2bn, the latest Exchequer Returns show.
EUR45.6bn in tax revenue was collected in 2015, up 10.5 percent on 2014. Revenue collections were 7.8 percent ahead of target, and corporation tax accounted for 70 percent of the surplus. The underlying deficit fell from EUR8.6bn in 2014 to approximately EUR3.4bn in 2015.
Finance Minister Michael Noonan welcomed the figures. He said: “Overall, an Exchequer deficit of EUR62m was recorded at end-December 2015. This is a massive improvement from a deficit of EUR8.1bn for 2014, which was buoyed by a return from some of our investments in the banking sector. When once-off factors are accounted for, we have an underlying Exchequer deficit in 2015 of around EUR3.4bn, compared to an underlying deficit of about EUR8.6bn in 2014.”
“In terms of performance against profile, while corporation tax accounts for the bulk of the increase, it is encouraging that there were also strong performances from income tax and value-added tax. This is further evidence of the economic recovery we have witnessed in 2015. The next step in our recovery is to put in place our medium-term strategy which will spread the recovery to all sectors of the economy and all regions throughout the country. We are determined to avoid the boom and bust cycles of the past.”
Martin Shanahan, the Chief Executive of the government investment agency IDA Ireland, said that the rise in corporation tax receipts is consistent with an increased level of investment activity. He announced that there had been a 66 percent year-on-year increase in the number of jobs created through foreign direct investment (FDI) in 2015. The number of investments secured during the year rose from 197 to 213.
He explained: “There has been a very strong pipeline of new investments over the past 18 months and we can see from [these] figures that multinationals are adding headcount at a high rate, which suggests a strong uplift in activity.”
Shanahan said that the stability of the Irish tax regime, including its corporation tax rate, has contributed to investor confidence. The introduction of a BEPS-compliant knowledge development box, with a 6.25 percent corporation tax rate for intellectual property, will further strengthen Ireland’s position, he added.
“However, Ireland needs to keep its tax offering under review, including personal tax rates, to ensure that we remain competitive in the international environment,” Shanahan concluded.
Reacting to the Exchequer Returns, Fergal O’Brien, Director of Policy and Chief Economist at business association Ibec, said: “The public finances have clearly benefitted from the economic surge in 2015. It is a significant achievement to be approaching balanced budgets again. However, [the] Government has been slow to react to the strong economic recovery, which the business community foresaw a number of years ago.”
He added: “The 2015 tax overshoot of EUR3.3bn reflects the buoyancy in both the domestic and export sectors of the economy. While [the] Government allocated some of this unforeseen revenue to supplementary day-to-day expenditure, it continues to neglect the country’s capital investment needs. The next Government will need to continue prudent management of the public finances, but it is vital that future economic prosperity is supported by a much more ambitious investment plan.”
