Mr. John McCarthy:

The increase in corporation tax receipts is very broad-based. While some of the multinationals may skew the figure, it is important to remember that actual receipts from the smaller firms - the SME sector - are growing at a faster pace than receipts from the large cases division. We have this concentration issue in Ireland. Some would see it as a risk. The Secretary General mentioned that the top ten groups pay one third of tax while the top 50 firms pay one half of corporation tax. By its nature, corporation tax is susceptible to firm-specific and sector-specific developments. We saw it back in 2012 and 2013 when the patent cliff occurred in the pharmaceutical sector so it does make it very difficult to forecast.

I emphasise the role of the exchange rate in overall profitability. I say this because our profiles for tax revenue were published last February when the assumption was that the economy would grow by about 4.25%. That was based on the assumption, and we are required to take the European Commission's assumptions under the new European semester, that the euro-dollar exchange rate will average about 1.29-1.30. Following quantitative easing, we now have an exchange rate that averaged about 1.05 for the year as a whole. We know that about 80% of firms in Ireland price in dollars so that depreciation of the euro has brought about a massive increase and improvement in terms of corporate profitability. That is a very important factor in trying to explain the increase in profitability this year so I would not underplay that. As the Secretary General said, we will need the detailed tax returns over the course of next year to be able to conduct a more in-depth analysis.

What we are doing at the moment is looking at some econometric work in this area to see if additional variables might improve the modelling we use. I know our colleagues in the Revenue Commissioners have set up an internal working group to look at this. We will probably work jointly. I will leave it at that.