Mr. Seamus Coffey:

Our view is that the performance of corporation tax, CT, has been exceptional and we are trying to get some handle on the size of that outperformance. A review of historical norms and the performance of the economy would suggest that a significant share of it is not explained by the historical patterns or the performance of the domestic economy. Given it has risen so quickly, it could fall as dramatically as it has risen in recent years. It should be recognised that these are not forecasts or projections. Rather, they are a modelling approach to identify what excess exists. Our view is that we should not be reliant on receipt of these revenues over the medium term. They could persist for a number of years but it is likely that there will be some reversal at some stage. Public finances that are very much dependent on these potentially temporary receipts should be avoided. We are not predicting a catastrophic collapse in corporation tax but our analysis suggests that we need to weigh up how much of it is an excess. It is significant. For example, in 2014-15, the forecast for corporation tax receipts at this point in time was approximately €5 billion.

As it is, those receipts are approximately €10 billion. As such, our estimate of the excess is not very different from the huge out-performance we have seen relative to the forecasts over the past three or four years.